Macron is pushing France to unseat Germany as the de facto rule-setter for the EU. He wants more integration at every level, but most importantly fiscally.
Macron understands that the euro is flawed because of a lack of fiscal integration. For the euro to survive at least three major things need to happen.
There needs to be a single entity capable of issuing and retiring Euro-zone sovereign debt. The ECB and the EU fiscal authorities need to have a relationship similar to that of the Federal Reserve and the U.S. Treasury Dept.
The euro has to weaken considerably to remove the garrote around the necks of countries like Spain, Portugal, Italy, Greece and even France.
Much of the existing sovereign debt needs to be converted into a Eurobond, doing away with much of the stock of debt as liabilities for member states like Italy and Spain. The ECB can lead the way with its $3 trillion it’s holding on its balance sheet.
Germany is dead set against any of these things occurring. It wants to continue with using the euro to underwrite its mercantilism to leverage its industrial prowess. It has benefited handsomely at the hollowing out of member states economies through internal trade advantages. And then, once they were broke used debt restructuring as a bludgeon to buy up their assets at pennies on the euro, c.f. Greece.
Italy was to be next on the block.
This is fundamentally why the euro is designed the way it currently is. It wasn’t a mistake, rather it was the plan.
Exactly. And that's how it works in practice. And why it will eventually need to change. Merkel's political weakness opens the door for change, and Macron may well push through.
In the meantime, we can cut better deals with the UK and any other Euro state that wants one.