The Shock Fund Can Increase Prosperity In Europe

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The Shock fund can Increase Prosperity in Europe. A so-called shock fund in the eurozone may increase prosperity in Europe, but is not necessary for the survival of the euro, concludes the Central Planning Bureau (CPB) in a report on Monday.

 

A shock fund would help the Member States with economic shocks with loans or benefits.

The fund would come to the rescue if unemployment rose sharply in a country.

The CPB believes that a shock fund requires more solidarity than what now appears to be the basis of support.

It can, however, offer insurance against major economic shocks in countries.

A shock fund with loans, according to the planning office, adds little compared to loans on the market.

A fund that provides benefits would add more.

Not necessary for the survival of the euro
The creation of a European fund is not essential for the survival of the euro.

There are alternatives such as “perfecting” the banking union and the capital market union.

Also, shocks can be absorbed by national fiscal policies and countries can rely on the exception conditions of European economic rules in an emergency.

There is also the European Stability Mechanism (ESM),

 the financial emergency fund where member states can borrow money if they get into trouble due to excessive government debt.

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