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Eurozone needs unemployment insurance system, German finance minister says

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Eurozone needs unemployment insurance system, German finance minister says

Europe should have an international unemployment insurance system to help eurozone economies withstand future crises, Reuters reported, citing comments by German Finance Minister Olaf Scholz in Der Spiegel.

Eurozone members could borrow from the proposed joint reinsurance fund when grappling with an economic shock that results in heavy job losses and strain social-security systems, and then repay the funds after the recession, Scholz said.

"I'm in favor of supplementing national systems for unemployment insurance with a reinsurance for the overall eurozone," the minister told the magazine. "At the same time, all countries should make efforts that their safety nets are as prepared for crisis as possible."

The proposal is part of Germany's efforts to secure a reform package with France ahead of a summit of EU leaders in June, Reuters said.

Scholz expects the system to bolster the eurozone's financial stability while assuring that Germany will not carry the risk of the new program and would instead profit from the increased stability.

He noted the proposed program's similarity with the U.S. system where individual states fund unemployment insurance but pay into a federal fund. He also noted that during the 2008 financial crisis, Germany launched a state-subsidized program that financed reduced working hours, which he said averted widespread job cuts.

In the same interview, Scholz said he is determined to introduce a financial transaction tax in Europe and supports a French proposal that revenue from such a tax on stock market transactions should be funneled to the EU budget if all countries implement it.

The finance minister added that turning the tax into a source of European revenue could reduce the broad opposition to it. The project would also come at a good time, he said, amid looming negotiations on EU's budget and the expected revenue shortfall due to the U.K. leaving the union. He expects the tax could boost the EU budget by 5 billion to 7 billion if it was introduced in the entire bloc.