Is Europe Headed for a Fiscal Union?

Amid the gloom of the pandemic’s second wave, some European enthusiasts are wondering whether this crisis might finally usher in a “fiscal union” of states — something akin to the U.S.

The roaring success this week of the European Union’s first social bond, issued to help fight off the pandemic recession, shows investors are eager to lend money to the EU as a whole, rather than just to constituent countries. At the same time Christine Lagarde, president of the European Central Bank, is encouraging the bloc to consider turning the joint-debt instruments created during the pandemic into permanent tools. This would move the EU a step closer to becoming a federation of states, since the European Commission —which is issuing the bonds — would have a bigger budget to redistribute resources toward countries in need.