Bun­des­bank calls for in­de­pen­dent watchdog on EU bud­gets

The Pak Banker - - COMPANIES/BOSS -

The head of the Ger­man cen­tral bank, or Bun­des­bank, called Fri­day for an in­de­pen­dent body to be set up to en­sure eu­ro­zone coun­tries abide by the bloc's bud­get rules. "Given the cur­rent role of the EU Com­mis­sion, there's a lot to be said for trans­fer­ring its tasks of bud­get mon­i­tor­ing and rule in­spec­tion to an in­de­pen­dent au­thor­ity," Bun­des­bank pres­i­dent Jens Wei­d­mann wrote in an ar­ti­cle for the weekly mag­a­zine Fo­cus. Wei­d­mann ac­cused Brus­sels of be­ing too lax to­wards coun­tries that fail to meet their com­mit­ments un­der the Euro­pean Sta­bil­ity and Growth Pact.

"The rather lax and po­lit­i­cal ap­pli­ca­tion of the rules by the EU Com­mis­sion is threat­en­ing to un­der­mine the (pact's) cred­i­bil­ity and bind­ing ef­fects," he ar­gued. The Bun­des­bank chief, who sits on the Euro­pean Cen­tral Bank's gov­ern­ing coun­cil, warned of a fur­ther re­al­lo­ca­tion of fi­nan­cial risks within the sin­gle cur­rency bloc.

"It isn't good in the long run for co­op­er­a­tion be­tween states if each mem­ber coun­try can or­der what it wants but ev­ery­body has to pay the bill at the end. In cur­rency union, ac­count­abil­ity and su­per­vi­sion must be brought into har­mony on a sus­tain­able ba­sis," he said. Wei­d­mann, who has been pub­licly crit­i­cal of the han­dling of the Greek cri­sis, said a "cen­tral Euro­pean in­sti­tu­tion could in­ter­vene di­rectly if a mem­ber state's eco­nomic and fis­cal poli­cies" give rise to sig­nif­i­cant slip­pages.

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