LONDON – The past year has been full of watershed developments. Aside from Donald Trump’s victory in the United States’ presidential election, some of the European Union’s weaknesses were fully revealed, with the United Kingdom’s vote to leave casting the bloc in a particularly harsh light. But Brexit does not have to spell the Union’s demise. Instead, it can serve as a wake-up call, spurring action to address the EU’s problems.
Some European leaders are attempting to heed that call, by urging EU member states to “complete the Union.” Without the UK, they argue, it will be easier to advance integration, as the remaining members are somewhat less heterogeneous, and therefore more likely to agree on steps that Britain might have opposed.
One such step – and a constant focus of attention since the euro crisis began – is a banking union. While substantial progress has already been made on this front, European banking integration is far from complete. Unfinished business includes a deposit-insurance scheme, as well as the creation of a senior tranche of safe sovereign assets, or eurozone-wide risk-free securities.
Another potential step, motivated by the profound asymmetry of eurozone countries’ economic performance during the crisis, would be a joint unemployment-insurance scheme, whereby cyclical unemployment benefits would be financed from the EU budget. Finally, the refugee crisis has led to a discussion of a joint scheme for enforcing the EU’s external borders, allocating asylum-seekers among its member countries, and financing their integration.