The new appointment would be subject to the formal approval of the European Parliament, and the Finance Minister would be member of the Commission, as well as chair of the Eurogroup. The Minister would thereby have the legitimacy to represent internationally the euro area in Economic and Financial fora, alongside the President of the ECB. Second, the euro area Finance Minister would need to be backed by a genuine Treasury administration, which could include staff from the Commission’s Economic and Financial Directorate General, the ESM, and the Economic and Financial Committee Secretariat. Such a civil service would also benefit from the public advice of two independent bodies, the European Fiscal Board and the Competitiveness Council. Last, if we succeed in implementing further integration, we will need stronger democratic control over euro area affairs. To this end, we will need to consider institutionalising a euro area format of the European Parliament. Relationships between euro area MPs and national parliaments will also need to be enhanced, through an inter-institutional agreement, or by creating dedicated commissions. *** To conclude, let me quote Robert Mundell 4, father of the theory of optimal currency areas and a famous analyst of international spillovers. He did acknowledge that the euro area was far from optimal. Yet he remained confident, saying: “it will be achieved because, for Europe, it isn’t just the best game in town, it’s the only game.” Economic policy as a whole, not central banking alone, is indeed the only game in town.
The reported balance is too high because nominal appreciation of the franc is not taken into account. And vice versa, for the same reason, the figure reported for income from foreign investment in Switzerland is too low. Our estimates show that inflation differentials play an important role in explaining the Swiss current account surplus. The blue bars in the chart are striking – and they are consistently positive; they explain a substantial share of the surplus. If we were to correct for (i.e. factor out) both of these statistical distortions, the current account surplus would almost halve. The corrected value is represented by the orange bars in the chart. It is still positive, but it is considerably smaller than the surplus when the distortions are factored in. Of course, this perspective implies that Switzerland’s savings surplus is also overstated. As we have seen, statistical distortions are responsible for a significant part of the Swiss current account surplus or savings surplus, but how is the remainder of this surplus explained? Demographics The bulk of the remaining current account surplus or savings surplus is attributable to demographic developments. Chart 6 shows the size of the various age groups of the Swiss population over time. In the last 45 years, the share of the population in the 40–64 age range (yellow line) has steadily grown. More than 35% of the Swiss population is currently between 40 and 64 years old and it is this age range that demonstrates the highest propensity to save.