The eurozone is a monetary federation without a federal budget. This unstable situation can evolve in two ways. One is implosion through political tensions between member states. I would like to promote the other, which is the emergence of a common sense of what is in the eurozone's interest through stronger co-ordination of economic policies. As long as the eurozone lacks a significant federal budget, it needs closer policy co-operation to achieve the desired fiscal stance.

In an effort to revive the eurozone's troubled stability and growth pact, Joaqu´n Almunia, the economic and monetary affairs commissioner, has issued proposals for monitoring national fiscal policies. These are a step in the right direction in at least two respects.