Friday

3rd Feb 2023

Commission proposes single euro seat in IMF

  • EU Commission vice-president Dombrovskis calls for a single euro seat at the IMF (Photo: European Commission)

The European Commission on Wednesday (21 October) proposed a single seat for the eurozone in the International monetary Fund (IMF) by 2025, in an effort to deepen the monetary union and give the currency bloc a unified voice in the global economy.

"If member states contradict each other, the Eurozone cannot gain the weight as its size of economies and share in IMF would suggest," Valdis Dombrovskis, Commission vice-president for the euro told press.

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"It is to ensure that [the] euro area talks with one voice", he added.

As things stand, the 19 euro zone countries have 23 percent of shares in the IMF, but due to divisions between the countries, their influence often counts less. The United States has only 17.7 percent of shares, but since it speaks with one voice, it has more clout.

The 19 member states are also spread over different constituencies with the IMF, which have to reach a common position on issues, thereby further hindering a single unified euro voice.

The Commission's legislative proposal, which is the first in a series of proposals that will stem from a push to deepen the unity of the currency bloc following the euro debt crisis, calls for a single executive director at the IMF to represent the euro.

At the ministerial level, the Commission proposes that the president of the eurogroup, a gathering of the bloc’s finance ministers, which is currently held by Dutch Finance Minister Jeroen Dijsselbloem, should represent the euro area.

The proposal will have to be approved by member states.

The push for a single seat at the IMF comes after the debt crisis prompted efforts to revamp the structures behind the single currency.

Other measures unveiled on Wednesday include a proposal to governments to set "national competitiveness boards", which would track the performance of countries on indicators such as wages and productivity.

There is also a plan for a "European Fiscal Board" to advise governments, starting from next year, on the enforcement of the EU's rules on deficits and debt.

Another proposal due before the end of the year is to focus on completing Europe's banking union by moving towards a common deposit insurance system, a scheme Germany currently opposes.

These are among the first concrete proposals following a report presented earlier this summer by the "five presidents" - European Commission president Jean-Claude Juncker, together with the president of the Euro Summit, Donald Tusk, Eurogroup president, Jeroen Dijsselbloem, European Central Bank president, Mario Draghi, and European Parliament president, Martin Schulz - on how to strengthen the monetary union.

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