The president of the European Central Bank (ECB), Jean-Claude Trichet, yesterday (21 June) called for no holds barred reform of the EU's fiscal and macro-economic policy, with deeper and more detailed surveillance of economies that are out of step with the EU's debt targets.
At a hearing in the European Parliament, Trichet called for a quantum leap to bring about a more effective structure for fiscal and macro-economic surveillance and adjustment, and urged MEPs to continue making bold proposals to rein in deviant economies.
"The ECB believes that a true quantum leap is needed in the framework for surveillance and adjustment of fiscal policies, as well as broader macro-economic policies concerned with Europe's competitiveness," Trichet told MEPs
He called for more stringent implementation of the EU's rules and procedures with sanctions that were both fast and quasi-automatic.
For countries with waning competitiveness in wages and costs, surveillance should be deeper and more detailed, he added.
"More ad-hoc reporting and dedicated country missions, policy recommendations, compliance requirements, public peer pressure and gradual financial steps to encourage compliance could all be part of that process," Trichet continued.
Though he welcomed EU leaders' commitments to greater fiscal surveillance at a recent summit on 17 June, he did not hide his eagerness to go further in giving more power over fiscal policy to Brussels.
According to Trichet, the European Commission should assume greater responsibility by making proposals, rather than "mere recommendations," which can only be modified by a unanimous vote from EU leaders.
The ECB president was referring to what he termed a "disrespect" some countries had for the EU's Stability and Growth Pact, which sets out the debt and deficit levels each member state of the 27-member bloc should maintain.
Spanish centre-right MEP José Manuel García-Margallo y Marfil put Trichet on the spot to define the terms 'economic governance', two words that have recently taken centre-stage in the EU's economic policymaking.
"With a single currency and in the absence of a federalist union, the euro zone needs the equivalent of a strong framework," Trichet said, calling for the Stability and Growth Pact to be reinforced by member states.
Trichet also endorsed a change to the EU's Lisbon Treaty to suspend voting rights of member states, an issue that has divided policymakers and some EU leaders, who fear a repeat of problems surrounding the ratification of the Lisbon Treaty in 2009.
Trichet's appeal for 'more Brussels' in fiscal surveillance and adjustment certainly goes further than conclusions drawn at last week's EU summit on economic governance.
Though, EU leaders pushed during the meeting for stricter and more effective sanctions against debt-laden member states, they agreed to place more emphasis on "levels and evolutions of debt and overall sustainability".
That is, a country will be considered to be in breach of the Stability and Growth Pact if its debt does not show a downward trend (EURACTIV 18/06/10)
A legislative proposal is expected to be tabled by the European Commission on 30 June.