FRANKFURT (MNI) – The Eurozone has come to the end of its banking
crisis, but further challenges remain, including improving economic
surveillance and strengthening the Growth and Stability Pact, European
Central Bank Vice-President Lucas Papademos said before Parliament.

“I would agree that over the past few years economic surveillance
has not been sufficiently adequate,” Papademos said during the question
and answer period following his ECB annual report 2009 presentation.
“Economic surveillance has not been particularly effective, not
necessarily in monitoring, but in assessing the increasing divergences
of competitiveness.”

Thus, “we’re looking forward to on one hand the strengthening of
the Stability and Growth Pact and institutional framework that will help
to prevent accumulation of fiscal imbalances,” Papademos continued. “But
at the same time the broadening of economic surveillance.”

Focussing his comments on Greece, the central banker said that the
Mediterranean country would need to complete its restructuring program,
which he expects to be in early May, before the activation of any aid
mechanism.

“Our own contribution would put special emphasis on issues that
relate to fiscal adjustment,” Papademos said, highlighting the
importance of reforms that would boost Greek competitiveness.

However, he also stressed the need for such reforms to be
consistent with the ECB’s price stability objective. “I think it is very
important that national economic policies, labour market policies and
structural reforms are designed and implemented in a way that is fully
consistent with objective of ECB and single monetary policy to maintain
inflation at close to but below 2%,” Papademos said.

“This is a fundamental benchmark to the design and implementation
of national economic policies.”

Papademos also commented on the International Monetary Fund (IMF)’s
participation in the Greek financial assistance mechanism, saying that
the Fund’s involvement, combined with that of the other Eurozone states,
was a “workable solution” to the country’s fiscal woes.

“What is important is the program is completed in timely manner and
that it addresses root causes of Greece’s structural problems,” he said.
“There will not be difficulties in reaching a common position.
(Differences will be) addressed effectively and an agreement will be
reached,” Papademos added.

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