Merkel: EU Commission should have more powers

German chancellor calls for strengthening bloc, embattled eurozone

BERLIN — German Chancellor Angela Merkel stressed Thursday that she wants more European integration and that there “cannot be a ban on ideas” in looking at ways to strengthen the bloc, especially the embattled 17-nation eurozone.

Merkel’s comments came a day after the EU Commission proposed the creation of a central authority with the financial muscle to fix its broken banks.

European Central Bank President Mario Draghi echoed that call Thursday, saying national regulators have repeatedly underestimated the problem of troubled banks, dealing with it in “the worst possible way.”

“We need to further develop the European Union, particularly the eurozone,” Merkel told reporters after a summit of government leaders from countries around the Baltic Sea in the eastern German city of Stralsund.

“I have always said that we need more Europe and that this will mean that more powers will be given to the EU Commission,” she added.

Merkel stopped short of endorsing the plan floated by the Commission for a central banking authority, which would require changes to the EU’s treaties — a lengthy procedure.

Merkel, the leader of Europe’s biggest economy, also defended the EU’s recent treaty enshrining fiscal discipline, saying it is merely a first step in enhanced European integration that must be followed by other measures later.

Draghi, who addressed the European Parliament Thursday, said the setup of the 17-country euro currency union is unsustainable. He warned EU leaders that they must quickly come up with a broad vision for the future to get the bloc through the current financial crisis.

Draghi said the central bank had done what it could to fight the 2½-year-old debt crisis by reducing interest rates and giving 1 trillion euros ($1.2 trillion) in emergency loans to banks. But it was now up to governments to chart a course ahead by reducing deficits, carrying out sweeping reforms to spur growth and strengthening the euro’s basic institutions, he said.

The euro was set up as a single currency with one central bank, the ECB, to issue the currency and set interest rates. But the different national governments continued to independently determine their budgets and manage their economies. The currency union was unable to prevent some countries from running up unsustainable debt burdens as their economies lagged with excessive business costs and economic imbalances such as trade deficits.