- POSTED: 10 Jul 2014 03:42
ECB president Mario Draghi urged European countries to bind themselves to structural economic reforms as another Italian, Prime Minister Matteo Renzi, leads a charge to ease EU rules.
BERLIN: European Central Bank (ECB) president Mario Draghi urged European countries on Wednesday to bind themselves to structural economic reforms as another Italian, Prime Minister Matteo Renzi, leads a charge to ease European Union (EU) rules.
"I believe that structural reforms in each country are enough of a common interest to justify that they are made subject to discipline at the community level," Draghi said in a statement released by the ECB.
"There is a strong case for us to apply the same principles to the governance of structural reforms as we do to fiscal governance. The essential cohesion of the union depends on it."
The European Union's Stability and Growth Pact already commits member countries in theory to maintaining public deficits and debt within specific limits, a position championed by Germany and other northern European nations.
Most EU countries, including Germany, have nonetheless breached those limits at one time or another, and many, notably Italy and France, continue to do so.
Renzi is now pushing for more flexibility in meeting the criteria, and pointedly told a Rome press conference on July 4: "Europe belongs to its citizens, not to bankers, either German or Italian ones."
On Wednesday, Draghi appeared to deliver his answer, stressing that it is the responsibility of EU governments to enact reforms rather than wait for the central bank or EU executive commission to ride to the rescue.
The ECB chief suggested however that political leaders could get cover for unpopular reforms, from the incoming commission to be led by Jean-Claude Juncker of Luxembourg for example.
"Establishing rules at the level of the union may in fact help national authorities implement reform," Draghi said.
"Historical experience, for example of the IMF, makes a convincing case that the discipline imposed by supranational bodies can make it easier to frame the debate on reforms at the national level".
Finally, Draghi made clear his opposition to calls by Renzi for looser rules, which have been echoed by EU members that have yet to thoroughly overhaul their economies.
"To unwind the consolidation that has been achieved, and in doing so to divest the rules of credibility, would be self-defeating for all countries," the ECB president argued.