Any Eurozone member country that fails to consolidate its budget or to restore competitiveness should be expelled from the currency bloc, Finance Minister Wolfgang Schaeuble wrote in an opinion piece in the Financial Times on Friday.
"A country whose finances are in disarray must not be allowed to participate in decisions regarding the finances of another euro member," Schaeuble wrote. "Should a Eurozone member ultimately find itself unable to consolidate its budgets or restore its competitiveness, this country should, as a last resort, exit the monetary union while being able to remain a member of the EU."
Schaeuble, the finance minister in the biggest Eurozone economy, said emergency liquidity aid may never be taken for granted. "It must, on principle, still be possible for a state to go bankrupt. Facing an unpleasant reality could be the better option in certain conditions."
According to him, the monetary union and the euro are best protected if the Eurozone remains credible and capable of taking action, even in difficult situations. "This necessarily means suspending an unco-operative member state's voting rights in the Eurogroup," he said.
While saying that the fallout from the crisis is becoming ever more visible, Schaeuble pointed out that labor markets in some countries are languishing and government debt almost everywhere is far in excess of permissible deficit limits. He sees only one course of action: all Eurozone members must return to adherence to the stability and growth pact as rapidly as possible.
With regards to Euro, he said the currency has shown itself to be a reliable anchor of stability in the crisis. It has protected the euro area from intra-European currency turbulence. But, Schaeuble said monetary union now face a decisive moment.
"If we wish the euro to be strong and stable on a lasting basis - our condition for bringing the Deutsche Mark and its high credibility into the euro fold - we have to be prepared to integrate further in the Eurozone," he said. "Co-ordination between euro members must be more far-reaching; they must take an active part in each other's policy making."
On Greece, Schaeuble said the country has reached crossroads and the case admonishes to draw lessons for the monetary union. He continued that his thoughts are on making the monetary union more resilient to a crisis and not directed at the at the specific measures to stabilize Greece.
Schaeuble, who first brought the idea of the European Monetary Fund, endorsed the creation of a European version of the International Monetary Fund to help the debt-stricken countries when needed. He proposed strict conditions and a prohibitive price tag must be attached so that aid is only drawn in the case of emergencies that present a threat to the financial stability of the whole euro area.
Political decisions about the aid should be taken in the Eurogroup in agreement with the ECB, the minister said. Emergency aid could also be coupled on a mandatory basis with stricter sanctions within the framework of budget deficit proceedings. "Monetary penalties could be imposed immediately and, once the aid and cooling-off period end, enforced against the member state without any recourse to reclaim the fine," he wrote.
He expects the prospect of emergency aid connected with hard corrective fiscal action to boost the confidence of financial markets, thus preventing a deepening of the crisis and obviating the Eurozone members' need to call upon the IMF in future.
Further, Schaeuble pointed out that grave structural weaknesses have been revealed in some euro area states and need to be addressed by a long, painful process of adjustment. Suggesting to take more decisive use of the instruments available, Schaeuble said from now on, a member state with an excessive deficit should not receive EU cohesion funds if it is not making sufficient savings.
German Chancellor Angela Merkel backs Schaeuble's proposals on EMF. A spokeswoman for Merkel said today that the FT article reflected their joint interests. European economic and finance ministers are set to hold a meeting to discuss the EMF next week, reports said.
"A slimmed-down version of the fund, if any at all, is likely to be the outcome," Commerzbank chief economist Jorg Kramer said in a note today. This will imply that it will merely be an assistance fund for problem countries - not least because more far-reaching concepts of an EMF would have to beratified by all member states. "This supports our view that the euro zone is moving away from a monetary union as outlined in the Maastricht Treaty and towards a transfer union." The euro zone cannot afford another Greece, he added.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.