More scrutiny and sanctions needed for rule-breakers, says Trichet
EUROPE'S leaders must introduce new measures to force countries to act responsibly, outgoing European Central Bank (ECB) president Jean-Claude Trichet said in a speech in Brussels yesterday evening.
He reiterated calls from the ECB and the European parliament for automatic sanctions for countries that break the rules of the EU's stability and growth pact, and implied that better surveillance procedures are needed for countries such as Ireland and Greece.
"Surveillance instruments were lacking altogether as regards the build-up of competitiveness losses and of macroeconomic imbalances, which have made any solution to fiscal problems even more challenging," Trichet said in a speech on completing economic and monetary union.
The ECB wants a "fully-fledged surveillance procedure" for competitiveness indicators and for macroeconomic imbalances, he added.
In a clear reference to Ireland and Greece, the ECB president told his audience that "the new procedure needs to be focused on the countries with large competitiveness losses and high indebtedness, since it is those countries that pose a potential threat to the functioning of EMU."
All countries will also have to agree on surveillance of fiscal policies and surveillance of macroeconomic policies to restore Europe's reputation. And there should also be stronger economic policy coordination for competitiveness, he added.