The European Union should abandon the fiscal rules intended to put constraints on national budgetary policies in favour of fiscal standards – qualitative prescriptions that leave room for judgment together with a process to decide whether the standards are met.

That is the central conclusion of a new research report by Olivier Blanchard (Peterson Institute), Alvaro Leandro (CaixaBank Research) and Jeromin Zettelmeyer (International Monetary Fund). The authors note that their proposals would mark a major departure from the status quo, requiring Treaty change.