By Nick Mann | 2 December 2011
The new president of the European Central Bank has called on European Union countries to agree joint principles for managing their finances.
Mario Draghi told the European Parliament in Brussels yesterday that a ‘fiscal compact’ would lend credibility to claims that countries were reforming in the face of the eurozone crisis.
‘Countries are on the right track to reform but a credible message is needed now. This compact will be the most important element to deliver credibility in the short term,’ he said.
Draghi did not rule out the idea of an EU treaty change to set out lasting changes, but said a ‘new approach’ was needed to deliver results faster.
His comments came just hours before the German Chancellor Angela Merkel this morning said that eurozone countries were on the verge of lasting fiscal union.
The Guardian reported that she told German MPs: ‘We are not only talking about fiscal union, we are beginning to create it.’ This would require budget discipline and an effective crisis management mechanism, she said, involving either treaty change or new treaties altogether.
But Merkel is reported to have rejected the idea of the ECB being made lender of last resort, which would involve it loaning money to countries unable to raise funds on the bond market.
She also restated her opposition to the bank issuing eurobonds backed by all eurozone members. ‘A joint liability for others' debts is not acceptable,’ she said. ‘Eurobonds are not a rescue measure in this crisis.’
Later today Prime Minister David Cameron will meet French President Nicolas Sarkozy in Paris. A spokesman for the prime minister confirmed that ‘European matters’ were on the agenda for the discussions, ahead of a summit of European leaders in Brussels on December 9.
In Brussels yesterday, MEPs backed a resolution calling for the establishment of a European treasury and a European minister of finance to relieve the ECB of the ‘exceptional’ role it is playing in saving the euro.
They also lent their support to calls for the bank to be officially established as lender of last resort. Conservative MEP Kay Swinburne said: ‘The ECB is already the lender of last resort and now politicians must legitimise this.’
