BERLIN (MNI) – ECB president Jean-Claude Trichet said Monday that
he supported the idea of an EU finance ministry with the power to impose
economic policies on Eurozone countries that fail to keep their economic
houses in order.

“A second stage should be envisaged for a country that persistently
fails to meet its programme targets,” Trichet said in a speech delivered
at Humboldt University in Berlin. “Under this second stage, euro area
authorities would gain a much deeper and more authoritative role in the
formulation of that country’s economic policies.”

“This would move us away from the present concept where all
decisions remain in the hands of the country concerned. Instead, it
would be not only possible, but in some cases compulsory, for the
European authorities to take direct decisions,” he said.

Implementing this idea “would evidently require a Treaty change”
and also “a new concept of sovereignty,” the ECB chief conceded.

The idea of a European Finance Ministry to oversee the surveillance
of both fiscal policies and competitiveness policies, supervise and
regulate the EU financial sector, and represent the euro area in
international financial institutions, now seems “not too bold,” Trichet,
whose eight-year term as ECB president ends October 31, argued.

In Trichet’s vision, such a European Finance Ministry would also
have the responsibility for imposing the “second stage.”

The ECB president raised the prospect of such a ministry in remarks
he made earlier this year, but today’s comments went much further in
spelling out the specific authority such an agency would have. In his
call for a transfer of sovereignty, Trichet joins the ranks of fellow
ECB executive board member Juergen Stark and Dutch Prime Minister Mark
Rutte.

EU leaders on Sunday agreed that they may need to consider “limited
treaty changes” in order to implement economic governance reforms seen
as needed to avoid future crises, but they delayed discussions on
concrete proposals until December.

The issue is highly controversial not only within the Eurozone but
also among non-euro area EU members such as the UK and Sweden, because
of fears that their influence in Europe would be marginalized by such
reforms.

Any changes to the EU treaty would require the approval of all 27
of the EU’s member states and in some cases national referendums, which
political leaders including the head of the European Parliament, have
warned lack popular support.

–Brussels Bureau, +324-952-28374; pkoh@marketnews.com

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