ECB urges tougher fiscal aims
By Toni Vorobyova |
June 22, 2010, Tuesday
|
Print Edition
Print Edition
EUROPEAN Central Bank policy makers pressed governments yesterday to follow even stricter budget rules and open their books to external monitoring as they urged a new carrot-and-stick approach to fiscal policy.
ECB President Jean-Claude Trichet said governments must bolster the confidence of consumers and investors by sticking to tough fiscal goals to ensure the eurozone recovery remains on track.
"The core of the economic union is the surveillance of fiscal policies," he told television channel Russia Today, before addressing European parliamentarians.
"What is extremely important is that they (the governments) not only behave properly themselves, but they are under surveillance, under close monitoring by their peers," Trichet said.
"I call myself, on behalf of the governing council of the ECB, for decisive progress in implementing this surveillance."
The ECB has called for a new system of incentives and sanctions to shore up the fiscal rules for the 16-nation eurozone, potentially involving an independent budget watchdog. Trichet will have the chance to outline the ECB's proposals, released last Thursday, in an appearance before the European Parliament's economics committee.
Governing council member Christian Noyer said the recent flare-up in market tensions - which drove up yields on the bonds of countries perceived to be struggling with public debt and deficits - showed the need for more discipline. "Doubts about the sustainability of public finances in many countries lie at the root of current uncertainty," Noyer, who is also governor of the Bank of France, told a business conference in Paris.
"Therefore, a condition for market tensions to abate is that budgetary discipline is implemented rigorously."
Greece's George Provopoulos said in an interview published in The Wall Street Journal that Greece's goal to cut its deficit to below 3 percent in 2013 would put the country on a sustainable path for debt.
"The same mechanisms operating in Greece apply to the euro area more generally. Therefore, it is essential that all countries stick to their commitments to correct high fiscal budget deficits and government debt to reduce fiscal vulnerability," he said.
ECB President Jean-Claude Trichet said governments must bolster the confidence of consumers and investors by sticking to tough fiscal goals to ensure the eurozone recovery remains on track.
"The core of the economic union is the surveillance of fiscal policies," he told television channel Russia Today, before addressing European parliamentarians.
"What is extremely important is that they (the governments) not only behave properly themselves, but they are under surveillance, under close monitoring by their peers," Trichet said.
"I call myself, on behalf of the governing council of the ECB, for decisive progress in implementing this surveillance."
The ECB has called for a new system of incentives and sanctions to shore up the fiscal rules for the 16-nation eurozone, potentially involving an independent budget watchdog. Trichet will have the chance to outline the ECB's proposals, released last Thursday, in an appearance before the European Parliament's economics committee.
Governing council member Christian Noyer said the recent flare-up in market tensions - which drove up yields on the bonds of countries perceived to be struggling with public debt and deficits - showed the need for more discipline. "Doubts about the sustainability of public finances in many countries lie at the root of current uncertainty," Noyer, who is also governor of the Bank of France, told a business conference in Paris.
"Therefore, a condition for market tensions to abate is that budgetary discipline is implemented rigorously."
Greece's George Provopoulos said in an interview published in The Wall Street Journal that Greece's goal to cut its deficit to below 3 percent in 2013 would put the country on a sustainable path for debt.
"The same mechanisms operating in Greece apply to the euro area more generally. Therefore, it is essential that all countries stick to their commitments to correct high fiscal budget deficits and government debt to reduce fiscal vulnerability," he said.
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