Merkel lays out her vision for the euro — but her ideas are still far from Macron’s

Aurelien Meunier | Getty Images

French President Emmanuel Macron and German Chancelor Angela Merkel during a press conference at Elysee Palace on August 28, 2017 in Paris, France.

German Chancellor Angela Merkel ended her silence on euro zone reform by showing some willingness to increase risk-sharing — a long-standing issue for many politicians in Berlin.

Merkel on Sunday revealed her vision for the future of the euro zone bailout fund — the European Stability Mechanism (ESM) — and for an investment budget to support euro countries with structural problems, in an interview with the Frankfurter Allgemeine Sonntagszeitung newspaper.

Her comments come a few weeks ahead of a key European Union summit, where many leaders, especially French President Emmanuel Macron, want to sign-off on specific policies to upgrade the euro zone. Macron went as far as asking for a euro zone finance minister.

Many politicians in Europe had criticized Merkel for not setting out clearly her thoughts on euro reform.

“This is Merkel’s first attempt to lay out a position on euro zone reform,” Constantine Fraser, Europe analyst at TS Lombard, told CNBC via email.

“She knows she has to engage with demands for more risk-sharing, but also has to bring onboard the conservatives in her CDU-CSU (coalition), and act, in a way, as the spokeswoman for the skeptical smaller northern European countries.”