Friday

18th Aug 2017

Bailout fund could become eurozone budget authority, says ECB

  • (Photo: Valentina Pop)

Eurozone states need to give up more sovereignty in order to fix the construction flaws of the euro, with the bailout fund possibly turning into a budget authority further down the road, European Central Bank board member Joerg Asmussen has said.

"We have construction mistakes of Economic and Monetary Union and it is time to correct them. It is clear that the core of the current debate has a name: further sharing of sovereignty," Asmussen said Tuesday (17 July) at the European Policy Centre, a Brussels-based think tank.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Part of the vision - which the ECB is shaping in a report drafted by EU council chief Herman Van Rompuy - is a cap on how much debt countries can issue, intervention in national budgets and fiscal corrections imposed if a country deviates from the deficit and debt limits imposed in the eurozone.

A common budgetary authority could also be formed, Asmussen said, with the upcoming permanent bailout fund, the European Stability Mechanism, a "starting point."

"The ESM is a fiscal authority by definition because it deals with taxpayers' money," he explained, adding that it would have to be put under the scrutiny of the European Parliament - or a subdivision of it pooling MEPs from eurozone countries only.

The €500bn-strong ESM is yet to be set up, pending a ruling of the Constitutional Court in Germany due on 12 September. Under current rules, the Parliament has no say over the ESM.

Asmussen said this needed to change and that the ECB itself should be under more scrutiny from the European Parliament, as it will acquire new supervisory powers of banks in the euro area.

"Deeper euro area integration can only be sustainable if there is progress on democratic legitimacy. And it should not be only the ECB continuously emphasising it," he said, adding that already now national parliaments could be involved more so that they "internalise" what it means to be an economic union.

As for the ten EU countries outside the euro area, Asmussen said they should not "fear" a multi-speed union, which is already happening. As long as the euro is not a "closed shop", but open to further members who meet the criteria, this should not be a problem, he said.

Asked if he thought all current euro members were "willing and able" to go this on this path of further sovereignty concessions, he said it was "worth fighting for" and that majorities in these countries needed to be convinced it's the only way to achieve prosperity.

The former German finance ministry official also defended the sometimes criticised stance of the ECB when giving advice to politicians on how to change the structure of the eurozone.

"It is clearly not beyond our mandate. If we can't answer where we want to be ten years from now, no one will buy a 10-year bond from us, and that is very much an issue for the ECB," he said

Airbnb too 'different' to pay EU tax

US home rental firm said its “model is unique” because most of the money stays in pockets of local people, as France and Germany prepare EU tax crackdown.

Greece looking at bond market return

Greece could issue 3-year bonds as early as this week, for the first time in three years, amid mixed signs from its creditors and rating agencies.

EU cautious with German diesel plan

The European Commission welcomed the German carmakers' pledge to update software in diesel cars, but is waiting for details on how emissions will be reduced.

News in Brief

  1. Macedonia sacks top prosecutor over wiretap scandal
  2. ECB concerned stronger euro could derail economic recovery
  3. Mixed Irish reactions to post-Brexit border proposal
  4. European Union returns to 2 percent growth
  5. Russian power most feared in Europe
  6. Ireland continues to refuse €13 billion in back taxes from Apple
  7. UK unemployment lowest since 1975
  8. Europe facing 'explosive cocktail' in its backyard, report warns

Stakeholders' Highlights

  1. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  2. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  3. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  4. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  5. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  6. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  7. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  8. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  9. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  10. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  11. ACCAAnnounces Belt & Road Research at Shanghai Conference
  12. ECPAFood Waste in the Field Can Double Without Crop Protection. #WithOrWithout #Pesticides