German Chancellor Angela Merkel awaits the arrival of heads of state at the 2012 Council of Baltic Sea States Summit on May 30, 2012 in Stralsund, Germany.
German Chancellor Angela Merkel awaits the arrival of heads of state at the 2012 Council of Baltic Sea States Summit on May 30, 2012 in Stralsund, Germany. - 
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David Brancaccio: It used to be a pipe dream of some European officials just a year ago. Now, German Chancellor Angela Merkel is pushing for a central authority to regulate all the finances of countries that use the euro.

Douglas Rediker, senior fellow the New America Foundation argues that the latest chapter of the euro crisis is bringing life to all sorts of previously impossible policy options. Mr. Rediker, good morning.

Douglas Rediker: Good morning.

Brancaccio: So among the possibilities are a actual budget union -- it's going to be a little hard to swallow in the individual countries, taking orders from a central authority, but this may be what Europe has come to.

Rediker: I'm not sure it's going to end up there, at least in the interim step. What you are more likely to see is a central budgetary overseer in Brussels or elsewhere. And what I mean by that is not that there will be one entity in Brussels that will dictate what budgets will be, but rather that budgets at the national level will simply be run by this central ministry for approval, meeting certain guidelines.

Brancaccio: Any other interesting thinking in the face of this crisis these days?

Rediker: One of the major stress points in Europe right now is obviously the banking system, both in Spain and elsewhere. And I think that you are seeing increasing talk about a central banking regulator and a central deposit guarantee scheme, similar to some degree to what we have in the U.S. in the FDIC, but they don't have that in Europe. And the other side is, there are a lot of different iterations out there for some sort of euro bonds and one of the major issues is that they have a huge accumulated stock of debt. And there were some conversations taking place about bonds that would actually work towards paying down that debt over 10, 20 years, as well as financing on-going budgets. And some of them are quite creative actually.

Brancaccio: Douglas Rediker, New America Foundation, thank you very much.

Rediker: My pleasure.

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