Thursday

28th Mar 2024

European Parliament adds to ECB reform pressure

The pressure to reform the European Central Bank is not going to go away, the head of the European Parliament's economic and monetary affairs committee has said with both the leading candidates in the French presidential elections also pushing for change.

Speaking to German daily FT Deutschland, Pervenche Beres, a French socialist MEP, said "this debate won't just disappear by itself...The French elections will set a dynamic in motion that will allow developments in this area."

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Her words come as both centre-right candidate Nicolas Sarkozy and his socialist rival Segolene Royal have made repeated demands for increased political control of the bloc's interest-rate setting, drawing anger particularly from Germany.

Mr Sarkozy has said that the euro should be "an instrument of economic policy serving growth and employment" while Ms Royal has called for the bank's statute to be expanded so that growth is a goal of price stability.

According to Ms Beres, the French pressure has already elicited some results, such as ECB bank chief Jean-Claude Trichet's willingness to have more frequent meetings with Luxembourg prime minister Jean-Claude Juncker, the head of the 13 countries that have the euro, as well as with EU monetary commissioner Joaquin Almunia.

She notes that it will be difficult to change the EU treaty on the ECB which puts price stability as the bank's main goal, particularly given Berlin's opposition.

However, Ms Beres indicated that she thought it would be enough if a consensus would grow among the euro countries that the treaty goals are "better interpreted and used."

"When the price stability goal is reached, then monetary policy must help to reach other goals."

The debate around the ECB and its interest-rate setting policy has been ongoing for several months reaching a high point last year when it became known as the battle of the Jean-Claudes.

Some analysts say it could now become entangled in the revived talks on the EU constitution if either Ms Royal or Mr Sarkorzy choose to make changes to the ECB policy a condition for accepting a new-look treaty - the current version was rejected by French voters in May 2005, with one of the main contributing reasons thought to be French fears about losing their jobs and a lowering of their social security.

Any proposed changes would likely open a bitter debate: German chancellor Angela Merkel recently criticised the euro discussion in France saying "If we want to preserve confidence in the euro, we must leave it outside political debate, leave the European Central Bank its independence. That is the very firm German position."

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