Tags: Europe | budget | rules | deficits

ECB's Mersch Says Budget Rules Not Being Applied Strictly Enough

Monday, 17 Jun 2013 02:23 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

European Central Bank Executive Board member Yves Mersch said euro-area governments may be returning to lax fiscal policies and shouldn’t easily be able to delay budget-cutting measures.

“I fear that the unsound economic policies in some member states are once again not being opposed decisively enough,” Mersch said, according to the text of a speech in Hamburg. “Deadlines for the correction of excessive budget deficits should, for instance, only be extended, by way of exception, in the event of exceedingly adverse circumstances. Extensions should not become the rule.”

Mersch is the second ECB board member today to take aim at a decision by the European Commission in May to allow countries including Spain and Italy two additional years to reach budget-consolidation targets in the face of enduring recession and record unemployment. Joerg Asmussen said earlier that a slowdown in moves toward consolidation risks renewing turmoil on government bond markets.

The regulatory framework for steering European economic policy, including a new arrangement for coordinating national budgets, isn’t being implemented consistently, Mersch said.

“The rules of the new European governance framework can only be effective if they are strictly applied,” he said in the speech. “Its success thus depends on the action taken by the European Commission and the Council of Ministers.”

Bank Supervision

Mersch also criticized a proposal by German Finance Minister Wolfgang Schaeuble for the introduction of a Europe-wide mechanism for winding down or restructuring failing banks, which would see national systems linked without transferring control to the European level. ECB officials have said they want such a system to be ready by the time the Frankfurt-based central bank takes over responsibility for supervising banks next year.

“A network of national authorities would fall short of what is necessary in this respect,” Mersch said. “A European resolution authority would ensure that decisions are taken in a timely and objective manner.”

© Copyright 2014 Bloomberg News. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
You May Also Like
Around the Web
Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved