A new political counterweight to the European Central Bank is under serious consideration. The change, which will involve a complete overhaul of the Economic and Financial Committee, is set to go to the EU's reform summit in Stockholm at the end of March.
Italian treasury chief Mr Mario Draghi, the current head of the EFC, is drawing up the blueprint which could mean that central banks and officials from non-euro zone countries such as the UK, Sweden and Denmark would no longer be on the committee.
The move, which has been spearheaded by the Belgians and the French, would mean there would be a political head of the group who would be seen as the equivalent of the US Treasury Secretary, Mr Paul O'Neill. The group would be chaired by Belgian Mr Didier Reynolds for a full year in the absence of the Swedes.
Proponents say that the reformed group would have a permanent secretariat, allowing smaller countries such as Ireland access to more background information and briefings. It would also ensure better communications on the euro and would bolster the peer review financial discipline which has been at the heart of the Republic's current problems with the European Commission.
However, smaller countries are likely to be very cautious, fearing domination by bigger countries. The Republic would also be very cautious about sidelining the UK which in many cases is a natural ally in Europe, particularly on tax harmonisation.
However, other sources say the British are unlikely to fight the move hard. Sources recognise that in the event of a serious shock, finance officials and central bankers may not agree on what should be done and thus the euro group should be built up as an alternative political power base. There is also some sense that opposing the move could be futile.
Currently the EFC includes senior officials from all 15 finance and treasury departments and central banks as well as representatives from the Commission and the European Central Bank. It prepares the agenda and decisions for the euro group, made up of the euro zone's 12 finance ministers, and Ecofin made up of 15 ministers.
The reform would mean the group would work primarily to the euro group without central bankers who would be represented by the ECB's vice-president Mr Christian Noyer and chief economist Mr Otmar Issing.
The presence of Commission officials has not been decided but some countries such as the Republic are likely to favour their inclusion as a counterweight to the larger countries.
Under the proposals, ministers from those countries which are not members of the euro zone could still attend the meeting, but would not take part in the preparation or monitoring of the meetings. They would be limited to Ecofin-only discussion - for example on issues such as indirect taxation. Most economic discussion, currency management and taxation and spending policy would be dealt with exclusively in the new group.
The reformers were given much encouragement last year as the euro continually fell with no real political intervention. They point out that in the US there is a permanent dialogue between the Federal Reserve and the Treasury and argue that that is what is needed in Europe.
There is some question about whether the move would need an amendment to the Maastricht Treaty. However, sources point out that once the Nice Treaty is ratified the "reinforced co-operation" already agreed would be able to be invoked to avoid the need for any treaty changes.
