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The COVID‐19 crisis: A Hamilton moment for the European Union?
Author(s) -
Issing Otmar
Publication year - 2020
Publication title -
international finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 39
eISSN - 1468-2362
pISSN - 1367-0271
DOI - 10.1111/infi.12377
Subject(s) - european union , covid-19 , financial crisis , political science , library science , economics , keynesian economics , economic policy , medicine , computer science , disease , pathology , infectious disease (medical specialty)
According to Jean Monnet, one of the founding fathers of the European integration after World War II, Europe always needs a crisis to make progress in integration. The COVID‐19 crisis seems to deliver a perfect case to go forward. The pandemic represents an exogenous shock for all EU member countries. But the impact is asymmetric. Countries with already high public debt before the crisis would run into great difficulties in financing the measures needed to stabilise their economies. Against this background, a number of politicians and academics have called for a “Hamilton moment” and proposed mutualising the new debt at the European level and providing the financial means to the countries most seriously hit by the pandemic. In 1790, upon a proposal by the Union's finance minister Alexander Hamilton, the debt of states accumulated during the War of Independence was assumed by the Union. Hamilton interpreted this act as “cement” for the Union. Should the EU follow this example and move in the direction of a fiscal union? This article tries to demonstrate that the historical comparison is not well founded, and the establishment of a fiscal union in Europe needs a change of the Treaty on the Union.