FRANKFURT (MNI) – The Eurozone must have a “convincing” governance
strategy to overcome the persisting turbulence on sovereign debt
markets, European Union Monetary Affairs Commissioner Olli Rehn said
Tuesday.

“The economic situation has improved and the recovery has taken
hold,” the Finnish commissioner told reporters in Brussels. But the
Eurozone is “not out of the woods yet.”

European leaders still must “decide on a convincing and
comprehensive strategy to enhance governance and growth, and we have to
do it in the course of March,” he urged. “And that’s on track.”

Rehn said he saw “simply no link” between Bundesbank President Axel
Weber’s resignation and the German negotiating position on European
governance reform.

“I don’t want to comment on the decisions around the Bundesbank nor
the European Central Bank,” he said. “I have full respect for the
independence of the Eurosystem according to the [Maastricht] treaty.”

“The preparations of a comprehensive strategy for competitiveness
and growth will be done on its own merits,” he explained. “I am very
happy that all of the member states are very constructively contributing
preparations on this comprehensive strategy, which we need.”

“We need a convincing and therefore comprehensive strategy which
tackles all the problems of competitiveness and bottlenecks of growth,
as well as ensures intensified fiscal consolidation in Europe,” he said.

Rehn reiterated the need for fiscal consolidation and noted that
this topic was discussed by Eurozone and EU finance ministers —
“concerning several member states in quite some concrete detail.”

“We need structural reforms, which we expect that the member states
will intensify. Not only Spain and some others, but all over Europe to
lift our growth potential,” he pleaded.

While nothing has been officially decided yet on expanding the
lending capacity of a future European Stability Mechanism, Rehn said
“there is a consensus in principle on the level of effective lending
capacity” of the ESM.

–Frankfurt bureau, +49-69-720142, frankfurt@marketnews.com

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