The European Union’s top bailout official suggested that the days of the “troika” might be over, with an EU duo taking over management of any new euro-zone rescues. Klaus Regling, head of the European Stability Mechanism, told Handelsblatt that an expanded version of his agency could work together with the European Commission to manage future bailouts, replacing the role of the Washington-based International Monetary Fund and the European Central Bank.
The troika of the IMF, ECB and European Commission has led euro-zone rescues since the continent’s debt crisis broke in 2010. Mr. Regling’s idea of an EU duo instead of the troika goes back to a suggestion from Jeroen Dijsselbloem, the Dutchman who heads the Eurogroup of euro-zone finance ministers. “I think that a future European Monetary Fund that works together with the Commission could do this,” Mr. Regling said.
Such an arrangement could be implemented quickly because it wouldn’t require any amendment of the EU treaties, Mr. Regling, a former hedge fund manager, said. The German government has long favored turning the ESM into a European Monetary Fund and expanding its responsibilities. A German-French working group is studying ways to do this.
As part of that expansion, Mr. Regling, a German, suggested that the euro zone could set up a “rainy day fund” similar to those in the United States to provide short-term help for member countries with payment problems resulting from an economic shock. A supplementary unemployment insurance – similar to federal unemployment insurance provided in the US – could complement this aid.