ANDREAS DOMBRET: Global Senior Advisor, Oliver Wyman, former Member of the Board, Deutsche Bundesbank, and former Member of the Supervisory Board, European Central Bank.

The Covid crisis has prompted Europeans to take unprecedented initiatives to protect their economies. The European Central Bank acted swiftly by establishing its "Pandemic Emergency Purchase Program" with an envelope of [euro]750 billion to backstop debt markets. Fiscal policy had to act, too: The EU Council agreed to a [euro]750 billion package of loans and grants. Enthusiastic labels have been attached to this decision calling it an "Hamiltonian moment." Can the measures justify such high praise?

The EU package is a one-off extraordinary initiative aimed at kickstarting economies and at providing funds to compensate for the economic contraction caused by Covid-19. But the hardest-hit European economies also need to address deeply structural issues unrelated to Covid in order to close the gap with the more competitive EU economies. And the European Union still lacks the governance mechanisms of a "true" fiscal union and therefore still falls short of what a "Hamiltonian moment" is all about.

The "noble right" of any parliament in democracies is to decide on budget policy and, residually, on debt. The Council package does not have such a mechanism.

Taxpayers of country A fund the expenses of country B without having a say on their use and vice versa, which was key to reaching Council consensus. The compromise of providing veto powers--given the lack of "real" fiscal governance--may lead to new rifts between members while EU member states continue to be unwilling to cede sovereignty on tax and spending measures to the European Union in the foreseeable future.

The effect of the welcomed Council package will...