Trichet threatens fiscal offenders with suspension of EU voting rights
EUROPEAN Central Bank President Jean-Claude Trichet said governments in breach of European Union fiscal rules could face tougher punishment, including the withdrawal of voting rights.
"A wider spectrum of financial sanctions needs to be considered, along with non-financial and procedural sanctions, such as more stringent reporting requirements or even a limitation or suspension of voting rights," Mr Trichet said in Brussels yesterday.
EU officials are devising new fiscal rules to prevent a repeat of the European sovereign debt crisis, which was sparked when Greece's budget spiralled out of control and forced it to seek an EU-led bailout. European leaders plan to outline the strengthened enforcement system by October after hammering out a $929bn (€754bn) rescue programme last month.
Mr Trichet said governments should explore every route that "the legislation of Europe permits" to toughen EU rules. Beyond that "we could reflect on changing the treaty". The last revision to the EU's treaties, signed in Lisbon, took eight years to negotiate and ratify.
Mr Trichet also indicated that the EU's efforts to ease money-market tensions were starting to work.
The EU's crisis-fighting measures have nevertheless failed to reassure all investors that the danger has passed.
The extra yield that investors ask to hold Spanish 10-year government bonds over German bunds surged to a euro-era high last week after the 'El Economista' newspaper reported the IMF, the US and the EU were preparing a lifeline for Spain. The EU "firmly" denied the report. (Bloomberg)