A rainy day fund may appear in the European Union
The International Monetary Fund has proposed to establish a special fund for EU countries. The fund will help to deal with emergencies and recessions, reports “Investor”.
The director of the IMF, Christine Lagarde, during his speech in Berlin, proposed the idea of creating a black day fund. Countries-eurozone members will have to pay 0.35 percent of their GDP, which will be used to stabilize the community in case of financial difficulties.
It will mean that the largest economy in this zone, Germany, has to invest about 11.4 billion euros every year. The idea of such a fund has been discussed by European officials for a while now. It is believed that this could be a beginning of a joint budget, an idea that has considerable support in France but is not received well in Berlin.
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So far, there has been no real discussions of the topic due to the unstable political situation in the EU and in Germany in particular. However, according to the IMF’s chief, in order for the eurozone countries to prepare for the economic downturn, they must modernize the capital markets of the union and improve the banking union, as well as a transition to greater fiscal integration.
It is believed that in certain extreme circumstances, countries can take loans from the emergency fund. They can repay these loans in the future. Thus, countries will have a common financial security.