European Union may transform into a smaller, more integrated fiscal union, said Ken Goldstein, spokesperson with The Conference Board at a press conference with NYU BER students Tuesday, Sep.11, 2012.
One big problem with the perils in the Euro zone is that the European Union has only been a monitoring union, which offers little solid financial stability to its members. According to the Financial Instability Index for the Euro Area from The Conference Board, the European financial market is highly unstable in respond to all the recent happenings. The Index dropped two points from a whopping high of 6 points after the ECB launched the Long-term refinancing operations in a new form at the beginning of this year.
Transforming from a monitoring union to a fiscal union is going to help stabilize the financial market of the European Union, boost investor’s confidence, and help rebuild the consumer and labor market.
Glodstein said that the one currency is not fitting for all the countries in the European Union that are economically diversified. German is the apparently the economic giant of the European Union, but as it has been proved that smaller countries such as Greece has not been able to balance its budget book nearly as well. Eventually, Glodstein said, there would be countries either leave or to be thrown out. It is not certain if the European Union is at the critical point yet, but eventually what is left might be a much smaller union.