BRUSSELS (MNI) – The creation of the European Stability Mechanism
is important, but should only be used as a “last resort” and should be
subject to strict conditions to avoid moral hazard risk, European
Central Bank Vice President Vitor Constancio said on Wednesday.
In the text of a speech given at an event here, Constancio also
said that current projections point to slow growth for both the European
Union and the Eurozone over the next decade, “in large part due to
disappointing productivity growth”.
“Faced with ongoing debt sustainability challenges and future
age-related expenditures, Europe needs to do more to reverse this
trend,” the central banker said. “Elevating the growth potential of the
euro area through structural reforms is therefore essential.”
Constancio called for a “quantum leap forward” to
strengthen the Stability and Growth Pact, while correcting and
preventing fiscal and macroeconomic imbalances are key to sustainable
growth and financial stability.
The central banker listed a number of key elements, including a
greater level of automaticity and more effective enforcement tools, and
was encouraged by the recent proposals. However, they do not go far
enough, he added.
“The room for halting or suspending procedures against those
Member States breaking the rules must be reduced,” he said, adding that
“the requirements of avoiding negative imbalances must be more demanding
for members of the monetary union.”
— Frankfurt bureau; +49-69-720 142; email: frankfurt@marketnews.com —
[TOPICS: M$$CR$,M$$EC$,MT$$$,M$X$$$,MGX$$$]
