Trichet: EU treaty change needed to 'impose decisions' on states
The outgoing head of the European Central Bank (ECB) has called for a change to the European Union treaty to allow for the outside imposition of economic policy on a member state.
ECB president Jean-Claude Trichet told French broadcasters on Sunday (16 October) following a meeting of G20 finance ministers in Paris that such a step is necessary in the wake of the eurozone crisis to guard against any one member state endangering the single currency area.
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"It is necessary to change the treaty to prevent one member state from straying and creating problems for all the others," he said. "To do this, one even needs to be able to impose decisions."
Trichet, who will soon be leaving the central bank after eight years at the top of the organisation, said that in the absence of a federal state, such external supervision is required.
"We don't have a federal budget, we don't have a political federation so we have to fully respect the constraints and the mutual supervision rules that exist in the euro zone," he said.
Ministers at the G20 meeting of national economy chiefs from the world's leading economic powers issued a joint statement expressing hope that an EU summit dedicated to the crisis next weekend (23 October) will draw a line under the eurozone's problems, saying they expect the bloc to "decisively address the current challenges through a comprehensive plan."
The summit - split into two parts between the wider EU bloc as a whole and the smaller 17 nations of the euro area - is to unveil a package of measures including a recapitalisation of Europe's banks, an expansion of the eurozone's rescue mechanisms to convince markets Spain and Italy are safe from contagion and a significant write-down of Greek public debt.
France and Germany, for some weeks now at loggerheads over the scale of such a Greek haircut for investors, appear to be closing in on a common position.
"We have points of agreement that are emerging and we'll have an agreement on this question," French finance chief François Baroin said following the G20 meeting. "Heads of state and government, in particular the chancellor and the president to put together the elements of the agreement on 23 October."
After months of strong criticism from across the Atlantic, Washington gave its imprimatur to the progress European powers are making in developing a comprehensive plan to put the crisis behind them.
"They clearly have more work to do on the strategy and the details, but when France and Germany agree on a plan together and decide to act, big things are possible," US treasury secretary Geithner said.
"I am encouraged by the speed and direction in which they are moving."