On Tuesday ECB President Jean-Claude Trichet again appealed to MEPs to play the card of ambition to reform the Commission's proposals on economic governance which, "although going in the right direction lack some boldness and detail". In a veiled criticism of recent events, Mr Trichet repeatedly took the opportunity to call for "verbal discipline and clarity" which was essential in such times.
"As co-legislators on this package I have no doubt that you will be up to the challenge of making the economic governance model better" Mr Trichet told MEPs at his regular appearance with the Economics Committee.
Mr Trichet spelt out his concerns regarding the Commission's proposals saying that the preventive arm of the stability and growth pact lacked detail, that the planned sanctions could be evaded too easily by invoking exceptional circumstances, and that more work needed to be done to define in advance what constituted a macro-economic imbalance.
Jean-Paul Gauzès (EPP, FR) asked if the ECB chief had any fears of a domino effect in the light of the debt crisis, and whether the current tensions did not justify debt restructuring. "I do not doubt the stability of the Eurozone", Mr Trichet replied, rejecting any fears of a domino effect and adding that Ireland and Greece were both solvent and therefore the question of debt restructuring was not an issue.
Elisa Ferreira (S&D, PT) raised the possibility of the bailout mechanism not being able to stop contagion primarily because it was constructed on such an inter-governmental basis, whereas Edward Scicluna (S&D, MT) warned of the need to bring the growth dimension into the economic governance package, which was only dealing with debt.
Sylvie Goulard (ALDE, FR) asked whether the bailout mechanism should not be included within the economic governance package, anchoring it better to law. "This week we have received a good clarification of how the mechanism will work. It is probably best not to re-open this Pandora's box" Mr Trichet replied. "Transparency of how this mechanism will work must be improved", responded committee chair Sharon Bowles.
On Belgium, Dirk-Jan Eppink (ECR, BE) asked Mr Trichet whether a link could be established between the country's political uncertainty and the financial markets. Mr Trichet replied that democratic processes should be respected and refused to draw any conclusions about political instability and possible bond yield increases.
Philippe Lamberts (Greens/EFA, BE) argued that it was also time to "domesticate financial market players apart from the Member States", referring to Mr Trichet's call for more ambition to temper the inter-governmental character of the economic governance model. Mr Trichet said that 'haircuts', the involvement of the private sector in bond devaluations, would only help the speculators if not planned carefully.
Nikolaos Chuntis (GUE, EL) worried that an extension of the period for Greece to repay the EU/IMF loan would prolong austerity in the country. "We must realise that it is time to return to normal economic levels and not the falsely inflated economic levels existing before the crisis", Mr Trichet replied, indicating that an end to austerity must not be equated with Greece's economic level of 2008.
Marta Andreasen (EFD, UK) asked Mr Trichet what he meant by his past comments about sovereign nations not corresponding to this economic age. Nations were still the foundation but now there were also supranational financial institutions and the relationship between the two had to be properly addressed, Mr Trichet explained.
The MEPs responsible for drawing up the committee's position on the economic governance legislative package are expected to come forward with their draft reports in December. The European Parliament is co-legislator with the Council.
In the chair: Sharon Bowles