FRANKFURT (MNI) – There needs to be a recognition that monetary
union entails political union, European Central Bank Executive Board
member Jose Manuel Gonzalez-Paramo said on Thursday.
“The euro area has learned that the original design of EMU was
incomplete, and is now working hard to complete it,” he said in a speech
posted on the ECB’s website.
New mechanisms to prevent imbalances and improve crisis management
imply “a loss of sovereignty,” Gonzalez-Paramo said. “There has been a
belated recognition that monetary union entails political union.”
Gonzalez-Paramo cited the European Commission’s new Macroeconomic
Imbalances Procedure as one example. The mechanism could lead to
sanctions for Eurozone member states who had sustained current account
imbalances, including surpluses.
“In parallel to the Macroeconomic Imbalances Procedure, for
example, the Commission intends to undertake further analysis on the
drivers and possible policy implications of large sustained current
account surpluses, including trade and financial linkages between
surplus and deficit countries,” Gonzalez-Paramo said.
Europe’s “new model” is still under development and “needs to be
perfected — in particular in the financial sector, more work still
needs to be done.”
“That said, problems of regulatory arbitrage created by national-
level banking supervision are being addressed through an increasing
harmonisation of supervisory standards and the establishment of a
European System of Financial Supervisors with new European Supervisory
Authorities,” he said.
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