German minister praises Macron's "courage" in proposing euro zone reforms

© Reuters. Retreat of Germany’s Federal Cabinet in Meseberg

BERLIN (Reuters) – German Finance Minister Olaf Scholz on Monday praised Emmanuel Macron’s “courage” in proposing euro zone reforms, as signs grow of resistance to the French leader’s ideas among Chancellor Angela Merkel’s conservatives.

Macron is urging closer euro zone integration and wants the currency bloc to have a finance minister and budget while its rescue fund should be turned into a mechanism that can help member states pre-empt threats of financial instability.

Merkel’s conservatives are due to discuss such reforms on Tuesday before Merkel meets Macron later this week.

A draft resolution for German lawmakers drawn up by top conservatives rejects plans floated by the executive European Commission to make use of a specific EU legal provision to beef up the currency zone’s bailout system by creating a European Monetary Fund (EMF).

Scholz represents Merkel’s centre-left partners, the Social Democrats (SPD), who were given the finance portfolio in a coalition government that took office last month.

The SPD is less reluctant than Merkel’s conservatives to seek closer European integration. In particular, the conservatives are allergic to the idea of pooling risks and debts with other euro zone countries.

In March Macron and Merkel pledged to overcome differences to formulate a roadmap for euro zone reform in time for it to be approved by their European peers in June.

Speaking at an event in Berlin hosted by the BdB banking association, Scholz said the most important task now was to strengthen Europe and take further steps to help the bloc grow closer together.

“In my view Europe is the most important national issue for Germany,” he said. Of Macron’s reform proposals, he said: “It’s good that he does that with a certain amount of courage.”

At the weekend Scholz said Macron’s reform proposals should be addressed before European elections next year, but added that not all of the suggestions were feasible.

Euro zone states are discussing deeper integration of their economies, focusing on creating a banking union and turning the European Stability Mechanism bailout fund into a European Monetary Fund, with more powers to help troubled countries.

Scholz said the euro zone should speed up steps towards the banking union: “We don’t have a lot of time for that.”

He stressed that it was important to complete the banking union in such a way that it adhered to stability requirements.

Scholz also said he would stick to the previous government’s policy of ensuring a balanced budget, saying his ministry would come up with budgets that do not include any new debt.

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