FRANKFURT (MNI) – The latest round of fiscal reform measures in the
Eurozone may not go far enough to ensure “sound” policies, and they
demonstrate countries’ “unwillingness” to give up the “necessary degree”
of national sovereignty, according to a research paper co-authored by
European Central Bank Executive Board member Juergen Stark.
“The envisaged common approach to stronger domestic fiscal rules is
insufficient, and it is unclear whether countries will make meaningful
changes to domestic arrangements,” the paper, published on the ECB’s
website Thursday, said.
The paper, which listed Stark as the fourth of four authors, also
questioned whether the changes made to boost “statistical governance”
would be sufficient to ensure proper reporting of data, “as experienced
especially by Greece.”
“Most importantly, the new provisions still leave a considerable
degree of administrative and political discretion at each stage of the
process,” the paper read.
“All in all, the changes envisaged do not represent the ‘quantum
leap’ in the euro area’s fiscal surveillance which is necessary to
ensure its stability and smooth functioning.”
The paper went on to call for further strengthening of Eurozone
fiscal governance through a number of measures, including a requirement
that national deficits be approved at the European level “where they
exceed safe levels”, the ability to put states into “financial
receivership” if adjustment programs “do not remain on track”, and
automatic fines when deficits rise above 3% of GDP.
“These additional governance measures – together with adequate
financial sector and structural reforms – are essential to ensure
effective policy coordination and sound public finances in the future,”
the paper said.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: M$$CR$,M$$EC$,M$X$$$]
