Brussels, 23/11/2010 (Agence Europe) - Debate about the European Central Bank's Annual Report for 2009, based on a report by MEP Burkhard Balz (EPP, Germany) naturally moved to current events with many MEPs commenting on the Irish question and the role of the euro. Most Irish MEPs were critical of the Irish government but defended the euro as providing economic stability. Some of them criticised the role of banks in creditor countries, whose behaviour they described as not entirely innocent. Briefly commenting on the recent decisions on Ireland, EU Economic and Monetary Affairs Commissioner Olli Rehn said at the end of the debate that although the subject in question was the ECB Annual Report, he was prepared to briefly meet with the Irish MEPs to answer their questions.
Trichet defends euro and ECB and counts on EP support for “tangible”
European economic governance measures
The European Treaty stipulates that the president of the European Central Bank (ECB) shall present the ECB's Annual Report to the European Parliament, and in presenting the 2009 Annual Report, Jean-Claude Trichet welcomed the support from the EP throughout the financial crisis, demonstrating its desire and ability to ensure that the higher European interest prevails.
Speaking in English, French and German in turn, Trichet said that 2009 had been a particularly trying year, but the measures decided upon by the bank (cutting interest rates and supporting European banks by providing loans) had fought off the threats to medium-term price stability in the eurozone. Despite “correct” results for inflation, tensions on the bond market led to ECB intervention on the debt market to ensure proper transfer of monetary policy into realpolitik.
Trichet said that these unconventional measures were temporary, with the aim of providing rapid solutions, and some have already been withdrawn.
Giving a quick overview of the past 12 years, Trichet said that the ECB had kept its promises, particularly on price stability, with medium-term annual inflation currently standing at 1.87%. The ECB acted as a lighthouse of stability in a stormy environment and if it is to continue to play such a role, it must continue to enjoy full independence. Trichet said that in connection with the currencies of big countries around the world, lack of exchange rate stability is damaging to financial stability and a strong dollar is in everyone's interests, even the Fed's.
The biggest lesson to be learnt from the crisis is that greater European economic governance is needed in the interests of the EU as a whole, and not just for eurozone countries. In the next few months, Trichet said that a qualitative leap in economic governance would be required to ensure it becomes a tangible reality. He said that he knew the EP would be active to this end, adding that 2011 would mark the first year in the existence of the European Systemic Risk Board (ESRB).
Answering MEPs' questions, Trichet said that the ECB's role was to manage the 'M' in Economic and Monetary Union, in other words price stability, but it does not have any responsibility vis-à-vis economic union. The ECB president hammered home that the bank had been able to ward off global recession. What was now needed, he said, was to ensure that legitimate reflection on good management does not turn into an attack on the euro. It is important not to look for scapegoats, he added, pointing out that the euro provided stability. It is bad budget policies and bad European economic governance that caused the crisis, explained Trichet, slamming the European Council's position in this domain and its watering down of the Commissions' suggestions. He said that the member states' position is too weak when it comes to automatic sanctions and tight economic and budget policy. (L.G./transl.fl)