In recent years, the European Commission and the European Parliament have been supportive of a unified representation of the Euro area in international financial institutions, but in practice there has been very little progress in creating a common representation in international organisations. Using a cost-benefit analysis, this paper assesses different options and proposes in the short-term the creation of a new permanent Subcommittee of the Eurogroup Working Group, which would coordinate positions and use of votes for the Executive Board of the IMF. In the longer term, a unified representation of the Euro area could be achieved by using the European Stability Mechanism to merge member states’ quotas in the IMF into a single Euro area quota. In order to investigate the consequences of a Euro area common representation at the IMF, we employ the power index analysis, providing separate considerations of the effects in the Board of Governors and in the Executive Board, using the voting shares assigned after the full implementation of the 2010 quota reform. This is a quantitative analysis that has not been recently done by the academic literature on the subject. We identify the unified representation as beneficial not only for the Euro area, but also for emerging countries that want their increased economic weight to be reflected in the governance of the institution. In effect, on the one hand, emerging markets may gain up to 2-3% of additional fund quotas with the Euro area unification. On the other hand, it would lead the Euro area to deal with the imbalance issue as an internal problem rather than a problem for the international community. Finally, we suggest options for the new quota formula currently debated at the IMF that would preserve the important role of the Euro area also in case of a single membership.
