BRUSSELS (MNI) – EU Economic and Monetary Affairs Commissioner Olli
Rehn Wednesday urged the EU to accelerate its efforts to fight the
raging sovereign debt crisis, acknowledging that the situation in
financial markets was “getting worse by the day.”

On a day in which Germany, Europe’s most important economic power,
failed to find buyers for all the 10-year bonds it hoped to sell at
auction, Olli Rehn urged EU lawmakers to accelerate their implementation
of crisis measures agreed at an emergency summit on October 27 and to
ensure ‘firewalls’ were in place to halt the spread of the debt crisis.

Eurozone finance ministers need to agree on how to leverage the
currency bloc’s bailout fund, the European Financial Stability Facility
(EFSF), in time for a meeting of their finance ministers next Tuesday,
Rehn said. He also urged that the launch date for the fund’s successor,
the European Stability Mechanism (ESM), be moved forward.

In addition to immediate measures to respond to the crisis, Europe
needs a long-term vision to restore market confidence, the Commissioner
said, referring to new legislation proposed today that would give
Brussels sweeping powers to vet national budgets and enforce economic
and fiscal discipline.

Well-designed plans for Eurozone countries to issue
collectively-backed bonds could be a way to lock in economic discipline
and stability, Rehn he argued, but “if we were not to have sufficiently
strong safeguards of fiscal discipline then Eurobonds would easily turn
to junk bonds.”

Responding to questions from EU parliamentarians about the role of
the European Central Bank, Rehn emphasized the bank’s duty to maintain
financial stability.

The EU’s treaties “state very clearly that the first and foremost
objective of the ECB is price stability and that it can support other
objectives of the EU as long as it is not putting this first goal at
risk,” he said.

“The ECB has played a vital role in crisis management and in
fire-fighting,” Rehn added. “First of all, it has ensured price
stability with inflexible determination and secondly it has contributed
to financial stability by ensuring the normal functioning of monetary
policy mechanisms, as the ECB wording usually goes, with unconventional
measures that have been both effective and appropriate.”

Rehn called on Spain, the fourth-largest economy in the Eurozone,
to tackle its high levels of youth unemployment.

“It is not fair that the Spanish labour market is so divided
between insiders and outsiders. There must be something profoundly wrong
if unemployment is above 20% in the country,” he said.

–Brussels bureau: +32495228374; pkoh@marketnews.com

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