In a speech titled, “A Compass to Prosperity: The Next Steps of Euro Area Economic Integration”, IMF managing director Christine Lagarde outlined her recommendations. She focused on three of the reform areas for Eurozone officials to consider in the review in the coming months. The ares include a modernized capital markets union, an improved banking union, and a move toward greater fiscal integration, starting with the creation of a central fiscal capacity.
In particular, she mentioned IMF’s proposal of a “rainy-day fund” for building up assets in good times. During a downturn, countries could receive funding to help offset budget shortfalls. And, in extreme cases, ” the fund would be allowed to borrow, however any borrowing would be repaid by members’ future contributions.” Though, she emphasized that ” it will be a temporary cushion and not a permanent pillow.”
The full speech is available here.
