EU finance ministers: Greece and the future of the eurozone

On the second day of their informal meeting in Luxemburg, the finance ministers of the European Union seem to be keeping a low profile. Even though Greece has asked to renegotiate its credit terms after the snap elections on September 20, Luxembourg has taken a relaxed stance on the demands. When asked if the eurozone is willing to battle it out with Greece again, Luxembourg's finance minister Pierre Gramegna responded by saying, "We do not need a Plan B."

Collective nonsense

Resigned Greek Prime Minister Alexis Tsipras would like to win again with his shrunken Syriza movement, and has pledged to fight the creditors again. Four weeks ago, the euro finance ministers approved a third bailout package of 86 billion euros for Greece. The preceding disputes lasted months, while Greece reached the brink of bankruptcy and nearly exited the eurozone. "I am utterly convinced that Greece will meet its credit terms after the collective nonsense, the election campaign, is over," said Austria's finance minister, Hans-Jörg Schelling in his dismissal of Athens' demands.

In October, Greece's debt duties will be reexamined. If the country has been failing its responsibilities, then it will receive no more money, says Schelling. The EU Commissioner for Economic and Financial Affairs, Pierre Moscovici expressed himself more moderately by saying the Greek people can, of course, vote for whoever they choose but also believed that the parties supporting the debt deal will win and said, "I am not at all worried."

Reform is needed in the eurozone

After the exhausting negotiations with Greece, the EU finance ministers have been putting a great deal of thought into euro stabilization measures. The five presidents the major EU institutions have even submitted a paper on the subject. By 2025, a comprehensive monetary and economic union must be put into practice.

In the years to come, more EU states will introduce the euro as their currency. Even stronger collaborations within the EU will be needed to make economic policy and ultimately, it should lead to growth, employment and the satisfaction of people in the monetary union.

European finance ministers must guarantee common policy

Someday, a European economic governing body or a European finance minister must be introduced in the eurozone but before that happens, the European treaties must accordingly be modified, a task which will prove to be quite difficult given the eurosceptic mood in many member states.

"We definitely need a European institution - you can call it a finance minister - that views fiscal policy from a more political standpoint than it has until now and submits proposals to ministers on how to develop fiscal policies that serve the interests of the eurozone as a whole," said the German economist Guntram Wolff, who also spoke with the ministers in Luxembourg. It will take a while to get there.

Securing bank deposits: All for one and one for all?

In the meantime, several short-term decisions must be made. At the moment, the EU Commission and Germany are wrangling over one particular point: Securing bank deposits for savers and retail customers. The EU Commission would like set up a common safeguard for all bank customers in the eurozone as quickly as possible.

Germany is balking at the proposal as it fears that its country's money supplies could be tapped in the case of an emergency: in short, Germany feels that its savers and taxpayers would be liable for failed banks in other countries. Mutual deposit guarantees must be implemented, but only if the risks and liabilities ensuing from the recent financial crisis have been have been eliminated. Furthermore, Germany's finance minister, Wolfgang Schäuble, insists that the eurozone states first develop their own deposit protection systems. The safety of bank deposits up to 100,000 euros is an integral part of a major banking union that has been set to grow in steps.

"First of all we need – what the German side rightly says - a bail-in system," said the economist Guntram Wolff when he spoke to DW. "That means, if costs are incurred, the banks' other creditors must accept this and pay before anyone dips into the savings guarantee. So now the hot topic is: How much bail-in can we afford and when is it time to pool the responsibility, i.e., use the savings guarantee?"

Do not lump fiscal policy together with refugees

German finance minister Wolfgang Schäuble does not think much of a scheme put forward in which the costs for refugees are deducted from the sovereign debt and can thus skirt around the deficit criteria of the euro zone. The refugee crisis is about more urgent matters and Schäuble said, "It must be addressed now, otherwise we will lose European unity and much more."

The president of Germany's Central Bank Jens Weidmann also says refugees and fiscal policy should not be lumped together. Instead, the situation shows that a financial cushion must be set aside for emergencies. The European Commission should actually examine whether spending for refugees may fall under the monetary union's "extraordinary circumstances" clause, which would most likely lead to an increase in the government deficit.