ECB must go on participating actively in tackling the economic crisis

Published: 23 November 2010 y., Tuesday

Following on from Monday's debate with ECB President Jean-Claude Trichet, MEPs on Tuesday adopted a resolution, by a show of hands, gauging the ECB's performance in 2009 and suggesting actions to be taken in view of the economic situation.

In the light of the persistent problem of indebtedness, the resolution encourages the ECB to purchase government debt in a similar way to what is happening in the UK and the US.  It also highlights the problems caused by credit rating agencies judging Member State indebtedness and calls on the Commission to be more ambitious with its proposal for controlling how these agencies operate.

The resolution also stresses that a robust economic governance system is essential for true economic and monetary union and that the emphasis has until now been too focused on the monetary aspects.  It highlights the urgent need to address imbalances between Member States' economies and calls for the urgent setting up of a permanent crisis management framework.     

Finally, the resolution urges care when implementing the austerity packages around the EU to ensure that economic recovery is not seriously hindered.

The debate with Mr Trichet on Monday evening centred on the need to address the real and everyday worries of citizens with regard to the crisis, the problem of not addressing tax competition between Member States, the imperative of global coordination of financial regulation, and the potential benefits of Eurobonds. 

In the debate, around ECB activities in 2009, Mr Trichet detailed how the ECB had radically lowered its lending rates in 2009 to 1% and had elaborated credit support measures to shore up banks.  Mr Trichet also explained how the ECB was intervening in the debt security markets of the Eurozone in order to address the problems in the bond markets.

Speaking after Mr Trichet, Olli Rehn, commissioner for economic and monetary affairs, said that the assistance soon to be released to Ireland would provide stability to the whole Eurozone, concluding that the negotiations on the mechanism with the Irish authorities should be closed by the end of November.

The E in the EMU

Burkhard Balz (EPP, DE), EP rapporteur on the ECB 2009 report, stressed the importance of focusing on economic coordination among Eurozone Members to equip the EU to react properly to future problems, rather than to deal only with monetary issues.

Address the grass-root worries

"We need to think about our citizens", said Jean Paul Gauzes (EPP-FR).  "We have to communicate all the needed changes better" he went on to say adding that citizens' worries cannot be addressed by the actions of the ECB alone but by bolder action at policy-maker level.

Sylvie Goulard (ALDE, FR) stressed that thanks to the Lisbon Treaty there will be a public debate on the reform of economic governance. She stressed that the current debt crisis should "push us even further than what the Commission proposed for economic governance", with an oversight role for the EP.

A well-defended Eurozone

George Sabin Cutas (S&D, RO) pleaded for a "permanent mechanism to defend the Eurozone from speculative attacks", managed by the ECB and "possibly think about a European credit rating agency". He also stressed the need to add job creation to fiscal consolidation as parameter for policy decisions so as not to have austerity measures which hinder long-term economic growth potentials.

Tax competition and surplus countries

Sven Giegold (Greens/EFA, DE) touched on important details necessary for effective economic coordination.  "We need to tackle imbalances by also addressing surplus countries not only those running deficits", he said.  He also called for "a framework to deal with tax competition in the EU", pointing at Ireland's low corporation tax.

Global coordination

Kay Swinburne (ECR, UK) stressed that international coordination was key: policy decisions have to be taken together with all "large players" around the world and warned about the threat of national interests kicking in. Ms Swinburne also stressed the "difficult job" performed by the ECB, hoping for its success to enhance the EU role at global level.

Time for Eurobonds

Jurgen Klute (GUE, DE) criticised the ECB for not having issued Eurobonds to finance the Member States in difficulties, so to "avoid the casino approach". The consequence is, according to him, that "workers are left at loss".

The wrong angle

John Bufton (EFD, UK) claimed that striving for more economic coordination was not the medicine for the current difficulties since it was further integration itself which led Europe into the crisis. "A single currency can only work in a federalist environment", he said, wondering whether a federalist state is the ultimate aim of the Commission's proposals.

"Like a fire brigade"

"We need to act like a fire brigade, putting out fire in Europe" said Commissioner Rehn when replying to MEPs. Referring to the situation in Ireland, he said: "When someone is in trouble, you need to help him, (...) also in the interests of Europe wider stability". "All Members States would have been in much more difficulties without the EU shield", he added.

Instability caused by poor economic governance

"We have sentiment for the Economic Union, but we are only responsible for the Monetary one", said ECB President, criticising "the tendency to use the EU as scapegoat" and blame the Euro, "a robust and solid currency", for economic difficulties. "It is not the Euro that is at stake" continued Trichet "but financial instability driven by bad behaviour of fiscal policies" and "poor governance of economy" by certain Member States. Finally, he asked MEPs to work hard to ensure "a very strong surveillance and governance" of EU economy.


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