FRANKFURT (MNI) – EU bailout measures were necessary in the face of
spillover risks but have strained the very basis of the European
Monetary Union, European Central Bank Governing Council member Axel
Weber said Wednesday.
Weber nevertheless said that he is optimistic that the Eurozone can
emerge stronger from the current crisis if the right lessons are drawn.
In addition to problems in individual countries, “there is a risk
of spillover effects into other countries that could endanger the
financial stability of the entire euro area,” the head of the Bundesbank
said.
“However, the necessity of the measures taken must not obscure the
fact that they have significantly strained the basis of the currency
union,” Weber warned.
To reinvigorate EMU, a reform of EU rules are inevitable, Weber
asserted.
In particular, he called for a strengthening of the Stability and
Growth pact, including more automaticity in punishing countries that
violate the limits on deficits and debt. He also called for more
intensive surveillance of macroeconomic imbalances and the creation of a
crisis mechanism.
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