Is it possible to construct a legitimate fiscal and political union for the eurozone, while allowing member states to enjoy some degree of sovereignty? The answer, I think, is a cautious yes. I propose that the eurozone create a “fiscal club”, whose members would, most of the time, enjoy fiscal autonomy. If, however, their fiscal positions deteriorated so that they could no longer raise funds at a reasonable interest rate, they would automatically receive a bailout from the other club members – on the condition of an immediate loss of fiscal sovereignty. During the bailout phase, the country’s finance ministry would be run by Brussels, thereby establishing a contingent principle of “no eurozone taxation without eurozone representation”.
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