–ECB Chief Backs EU Commission Plan For More EU Surveillance

BRUSSELS (MNI) – The European Central Bank strongly supports a
formidable increase in economic governance, rigorous application of the
European Union budget rules and a plan for governments to submit their
budgets for peer review at the same time each year, ECB President
Jean-Claude Trichet said on Thursday.

“I am and we all are supporting stronger governance at the level of
the 27 (EU countries) and the 16 (Eurozone countries)… within the EU
and within the euro area,” Trichet told reporters at a press conference.

“It is extremely important that we make a quantum leap in this
domain for Europe as a whole, but particularly for the euro area,” he
said.

Trichet said more sanctions and “much more effective monitoring”
were needed.

“We have to go up to all that the legal framework permits. It is
absolutely of the essence,” he said.

The ECB also backs a controversial proposal where EU governments
would submit their budget plans and key projections for peer review at
the same time each year, a plan known as the European semester, he said.

“In the fiscal area… we are very strongly in favour of the
European semester,” Trichet said, adding that he trusted that some
countries that had opposed the European semester plans initially were
now in favour of the idea.

“We need more sanctions… it is absolutely of the essence, all
what we are experiencing is a wake up call,” Trichet said.

European governments are coming under increasing pressure to put
together plans to improve economic governance after investor worries
about high debt and deficit levels have weakened the single currency.

European Council President Herman Van Rompuy is leading a task
force which aims to up economic coordination among the 27
European Union countries but is treading a fine policy line because some
countries fear their sovereignty will be infringed.

Trichet was speaking at a press conference after the ECB Governing
Council decided at its monthly monetary policy meeting to leave its key
interest rate unchanged at 1.0%. The rate has been at this level since
May 7, 2009. The next rate-setting Council meeting will be held July 8.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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