EU Member States' reluctance to reform in the wake of recent economic crises will be "severely" judged by history. New economic governance rules need ambition, European Central Bank President Jean-Claude Trichet told the Economic and Monetary Affairs Committee on Monday. The ECB is "strongly determined" to keep inflation below 2%, maintains its "strong vigilance" over the Euro zone economy, and stands by its "non-standard" measures to put the economy back on its feet, he added.
MEPs focused their questions on current negotiations to hammer out new rules on economic governance, developments in Greece, international currency issues and their effects on the Euro zone, and the next round of bank stress tests.
Economic governance reform
Just ahead of last-ditch talks between Member States and MEPs on the set of rules to reform economic governance in the EU, Mr Trichet reiterated that the ECB backs Parliament's bid for ambitious reform. "The position that the EP is taking on this package is a good one. We would have wished the European Council to be more open to Parliament's position", he said.
Asked by Sylvie Goulard (ALDE, FR) whether it would be better to stick to the old stability and growth pact (SGP) rules if no more "automaticity" could be added to the system currently being worked out, Mr Trichet replied that other innovations brought into the "six pack" still made it better the current SGP.
Edward Scicluna (S&D, MT) argued that the EU response to the Euro zone crisis had been too piecemeal, and had paid too little attention to crisis prevention and to factors that could restart growth. Mr Trichet admitted that crisis prevention was "of the essence" but also insisted that fiscal tightening and solid rules to achieve it were what were currently most needed to restore confidence.
Greece: austerity the right medicine?
Speaking between two crucial budget votes in the Greek parliament, Nicolaos Chountis (GUE/NGL, EL) asked whether austerity was not the wrong therapy for Greece, given that Portugal, Ireland, and Greece were plunging into recession amidst rising piles of debt. Mr Trichet replied that austerity was essential, not as a punishment, but in order to correct previous bad practices.
Asked by Burkhard Balz (EPP, DE) about private sector involvement in easing Greece's debt troubles, and whether the French government's proposals for a partial rescheduling of Greek bonds would "set a precedent", Mr Trichet replied that "It is currently too early to give a firm view on this".
In the chair: Sharon Bowles (ALDE, UK)