The Birth of Fiscal Unions
A fiscal union can serve as a powerful mechanism for enhancing creditworthiness, while creating a sense of solidarity among disparate countries. But such unions tend to work only when there is an unmistakable shared security interest – something that the EU lacks.
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PRINCETON – Fiscal unification is often an effective way to enhance creditworthiness, and it may also create a new sense of solidarity among diverse peoples living within a large geographic area. For this reason, Europeans have often looked toward the model of the United States. But they have never been able to emulate it, because their motivations for union have been so varied.