02068cas a2200277 a 4500 AALejournalIMF018360 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484348178 2221-030X BD-DhAAL BD-DhAAL Arnold, Nathaniel. A Central Fiscal Stabilization Capacity for the Euro Area / Nathaniel Arnold, Bergljot Barkbu, H. Elif Ture, Hou Wang. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (57 pages) Staff Discussion Notes <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This note outlines a concrete proposal for a euro area central fiscal capacity (CFC) that could help smooth both country-specific and common shocks. Specifically, it proposes a macroeconomic stabilization fund financed by annual contributions from countries that are used to build up assets in good times and make transfers to countries in bad times, as well as a borrowing capacity in case an exceptionally large shock exhausts the fund's assets. To address moral hazard risks, transfers from the CFC-beyond a country's own net contributions-would be conditional on compliance with the EU fiscal rules. The note also discusses several features aimed at avoiding permanent transfers between countries and making the CFC function as automatically as possible-to limit the scope for disputes over its operation-both of which are important points to make it politically acceptable. Mode of access: Internet Barkbu, Bergljot. Ture, H. Elif. Wang, Hou. Staff Discussion Notes; Staff Discussion Notes ; No. 2018/003 Full text available on IMF http://elibrary.imf.org/view/journals/006/2018/003/006.2018.issue-003-en.xml IMF e-Library