Mr Trichet admitted that ideally, a treaty change would be needed to allow the most effective model of economic governance to be developed.  He nonetheless noted that the current treaty rules do give scope for making substantial progress, and said that Parliament should ensure that this was achieved, in the same way as it had pushed for a true reform of the system of financial supervision.

The debate with MEPs focused on the current economic scenario and economic forecasts, international financial regulation, austerity policies and the sovereign debt crisis.

What sanctions?

José-Manuel Garcia-Margallo (EPP, ES) asked Mr Trichet's opinion on the idea of removing voting rights as part of the stability and growth pact arsenal of sanctions. Again, Mr Trichet observed that although he himself supported the idea of political sanctions, this too would require a change in the treaty.  “We can go very far with secondary legislation for developing other incentives and sanctions”, he added.

Financial stability mechanism

Pervenche Berès (S&D, FR) asked whether it would not be necessary to develop a permanent financial stability mechanism, like that developed to help Greece.  Mr Trichet replied that it was surveillance that had to be strengthened, so as to avoid even getting into another situation like Greece's again.  “We must work on ways to prevent rather than on ways to cope”, he said in reply to a similar question by Werner Langen (EPP, DE).

Vicky Ford (ECR, UK) suggested that lending under the European Financial Stability Facility conditions would be like “giving someone already in trouble a very expensive credit card”. Mr Trichet replied that EFSF rules need to be tough, in order to prevent moral hazard.

Austerity still the right medicine

Sven Giegold (Greens/EFA, DE) challenged the austerity plans being prescribed as the right medicine for the crisis, contending that Ireland's austerity programme had led it to slip back into economic difficulties again.  Mr Trichet replied that the general economic outlook was not yet ideal and that Ireland's difficulties stemmed from this, rather than its austerity policies.  “The government's decisions will allow Ireland to regain competitiveness”, he added.

Jürgen Klute (GUE, DE) also criticised the wave of austerity policies around Europe.  “Why should it be citizens who are footing the bill for the crisis?  Why is the EU imposing so much austerity?”, he asked.  Mr Trichet replied that the wave of financial legislative reform would make the financial sector much more resilient in the future.  He also added that this was a global crisis and the EU should not be used as a scapegoat.

Global financial regulation

Wolf Klinz (ALDE, DE) raised concerns about considerable differences between the EU and the US on regulating the financial sector.  Mr Trichet admitted that some differences did indeed exist, but said that on the whole, both sides were moving in the same direction, adding that regulation at global level was crucial for success.