Economists call for overhaul of eurozone fiscal rules

Leading economists from France and Germany on Wednesday called for new fiscal rules for the eurozone and the creation of an independent watchdog to help to make the single currency more resilient against crises in the future.

Their intervention comes as Germany and France seek to inject new momentum into stalled EU reform efforts, and on the same day that Eurogroup chief Mario Centeno promised eurozone finance ministers would deliver a reform plan by June.

The economists' "blueprint for reform" is intended to bridge German demands for more fiscal discipline and France's insistence on more risk-sharing.

Wednesday's paper, entitled "Reconciling risk-sharing with market discipline: A constructive approach to eurozone reform", is authored by top economists from institutes such as Bruegel, Ifo and DIW, as well as Sciences Po in Paris.

"Our motivation is to not leave things the way they are. Europe needs reforms, and those have to go through France and Germany," Marcel Fratzscher of DIW told journalists at a Berlin press conference.

In their 25-page paper, the economists warned that even if the single currency area was "finally experiencing a robust recovery... after nearly a decade of stagnation", it "remains fragile."

Despite the ongoing economic recovery, the case "for a reform of the eurozone architecture is strong", the economists said, calling for "a shift in the fiscal and financial governance of the eurozone."

The fiscal rules laid out in the EU's Stability and Growth Pact -- notably the rule that member states are not allowed to run up deficits in excess of 3.0 percent of their economies -- "have not worked well," the economists wrote.