ECBs Mersch Thinks EU Should Consider Treaty Change Over Longer Term
LUXEMBOURGThe European Union should consider treaty change over the longer term, as this would increase the possibilities to strengthen the euro currency union, said European Central Bank Executive Board member Yves Mersch Monday.
In the longer term, it seems appropriate to reflect on the limits of the current framework in which we are evolving. A Treaty change could enlarge our horizon of possibilities, he said in remarks prepared for delivery here.
The consequences of misguided fiscal policies in a monetary union are too severe to remain self-policed. Beyond the recent reform of fiscal governance, the euro area centre could be endowed with veto rights over those national budgets that violate the European rules, he said.
The euro area needs to achieve a higher degree of economic convergence, in terms of competitiveness, growth potential and flexibility. This is essential for each individual country and for the smooth functioning of the euro area as a whole, he said. The framework for policy coordination should be made more stringent and enforceable at European level.
Europe is recovering from an historic debt crisis, which has forced leaders to come up with ways to toughen up fiscal rules.
In his prepared remarks, Mr. Mersch did not address current monetary policy. ECB policy makers tend to refrain from speaking about policy less than one week ahead of the monthly policy meeting. Most experts do not expect the ECB to announce new action at its next policy announcement, due to take place Thursday, despite very low inflation in the currency bloc. Some experts are eyeing June as a date where action might be taken, as the central bank may be forced to cut its inflation outlook.
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ECBs Mersch Thinks EU Should Consider Treaty Change Over Longer Term