Overshadowed by Europe's twin dramas over refugees and Greek debt, debate is bubbling up over how to strengthen European monetary union after six years of debilitating crisis.
It pits those who believe the 19-nation eurozone needs to take a bold step towards federal integration to survive as a stable currency area on one side, against those who argue that with scant public or political appetite for sharing more sovereignty, Europe just has to keep muddling through with modest, incremental change, Reuters reported.
The heads of five European Union institutions proposed in June a series of steps over the next two years to reinforce the bloc's banking union, better integrate its capital, energy and digital markets, foster economic competitiveness and counter macroeconomic imbalances without changing the EU treaty.
Even those relatively low-key proposals face resistance, notably in Berlin, where opposition to any further sharing of liability at a European level is deeply ingrained.
More ambitious ideas are also blossoming in Paris and at European Central Bank headquarters in Frankfurt.
Breaking Old Habits
Within days of the eurozone clinching a deal to keep Greece in the currency area with a third bailout, a French minister and a senior central banker called for a eurozone treasury with its own budget and parliament and power to oversee national economic and fiscal policies.
Economy Minister Emmanuel Macron said Paris and Berlin would have to shed past inhibitions about sovereignty and risk-sharing to "reinvent" Europe and make the eurozone work.
"For the French, this means we must carry out reforms that break old habits once and for all. It also means the Germans will have to break taboos," he told the Sueddeutsche Zeitung.
"If the member states are not ready for any form of financial transfer in the monetary union, as is the case today, then you can forget the euro and the eurozone."
Macron, a business-friendly young reformer in the Socialist Paris government, said a European economic government led by a super-commissioner should be able to borrow on the markets and have a separate budget bigger than the European Union's roughly 1% of gross domestic product.
Separately, European Central Bank executive board member Benoit Coeure called for the creation of a European finance ministry under the oversight of the European Parliament.
It would be responsible for preventing economic and fiscal imbalances, managing crises and running a eurozone budget, as well as representing eurozone governments in international economic and financial institutions.
Strengthening the Eurozone
Chancellor Angela Merkel said strengthening the eurozone was likely to be an incremental process, since few governments were keen to change the EU's founding treaty, requiring ratification by referendum in several countries.
Berlin and Paris were working on improving a European banking union, building a capital markets union and developing more effective governance to promote economic competitiveness, she said, and some extra financial resource could be then considered to help countries reform.
For now, Berlin is balking even at a modest proposal for joint reinsurance of national bank deposit insurance schemes.
The rise of anti-euro populist parties in many member states, including France, makes closer integration of the eurozone more politically risky, though not yet impossible.
Working out what to fix is made harder because economists and politicians still don't agree what caused the crisis.
But many economists say Germany's export boom and wage restraint opened imbalances in the eurozone, along with a surge of private debt in peripheral countries after a construction boom fuelled by low interest rates and reckless lending.
In that case, the solution would lie in boosting domestic demand in Germany and finding ways to write off or mutualize some of the debt overhang in the crisis countries.
Eurozone Treasury
In his first state of the union address last week, European Commission president Jean-Claude Juncker acknowledged that eurozone economies had diverged during the crisis, with unemployment and inequality rising and growth potential shrinking, fuelling public doubts about the currency.
Juncker, one of the architects of the 16-year-old euro, promised to work from mid-2017 on creating a eurozone treasury, built on the bloc's existing bailout fund, the European Stability Mechanism, to underpin the economy.
Such changes, along with making European oversight of economic and fiscal policies more binding, would require changes to the EU treaty that neither Germany nor France wants to raise before national elections in 2017.
Other ideas raised at a conference hosted by Austrian central bank on completing the monetary union included a common eurozone unemployment insurance scheme in crisis times, giving Brussels more power to make countries correct macroeconomic imbalances, and even borrowing from the ECB to fund public investment in infrastructure.
