The Economic and Monetary Committee (ECON) exchange views with Jean-Claude TRICHET, President of the European Central Bank, in the European Parliament in Brussels.

Brussels

exchange of views

meeting

monetary dialogue with the ECB (T)

GOULARD, Sylvie (ALDE, FR)

TRICHET, Jean-Claude (FR)

Monetary dialogue: extracts from the exchange of views with Jean-Claude TRICHET, President of the European Central Bank

SOUNDBITE (English), Jean-Claude TRICHET, President of the European Central Bank, The recovery is likely to remain uneven over time and across economies and sectors, in an environment of continued uncertainty and with tensions in some segments of the financial markets. The annual rate of inflation in the euro area stood at 1.6% in May, up slightly from 1.5% in April, mostly because of higher energy prices. We may see some further slight increases in inflation in the second half of this year. Looking further ahead, we continue to expect price developments to remain moderate over the policy relevant medium-term horizon.

SOUNDBITE (English), Jean-Claude TRICHET, President of the European Central Bank, We fully neutralise the bond purchases by means of specific reabsorption operations. As a result, the prevailing level of liquidity and the money market rates are not affected by the programme. In other words, our monetary policy stance is not affected, and there are no inflationary risks related to this programme.

SOUNDBITE (English), Jean-Claude TRICHET, President of the European Central Bank, The ECB believes that a true quantum leap is needed in the framework for surveillance and adjustment of fiscal policies, as well as broader macroeconomic policies concerned with Europe&rsquo;s competitiveness.

SOUNDBITE (English), Jean-Claude TRICHET, President of the European Central Bank, Fiscal surveillance must be more direct and effective. It must also be based on more independent monitoring and assessment. We may need a differentiated approach to surveillance depending on the fiscal performance of countries. The Commission should have greater responsibility by making proposals, which can only be modified with unanimity in the Council, rather than mere recommendations under the Stability and Growth Pact. In the event of non-compliance, sanctions need to be applied much earlier and to be broader in scope. They should not only address excessive debt ratios, but also apply when countries are not making sufficient progress towards medium-term budgetary objectives. A wider spectrum of financial sanctions needs to be considered, along with non-financial and procedural sanctions, such as more stringent reporting requirements or even a limitation or suspension of voting rights.

SOUNDBITE (English), Jean-Claude TRICHET, President of the European Central Bank, For countries that experience significant losses of competitiveness, surveillance should become increasingly deep and detailed. More ad hoc reporting and dedicated country missions, policy recommendations, compliance requirements, public peer pressure and gradual financial steps to encourage compliance could all be part of that process.

SOUNDBITE (English), Jean-Claude TRICHET, President of the European Central Bank, We have to do all the lessons, both from our poor implementation of the Stability and Growth Pact but also of what we know now can be the real stress test, the stress test in real magnitude that we have to go through now and so my understanding is that we need a quantum leap in terms of framework for surveillance'.

SOUNDBITE (French), Sylvie GOULARD (ALDE, FR), Do you not have the impression that we need to avoid undermining the powers of the Commission and avoid allowing agencies to proliferate? (...) The real important question is accountability and responsibility of the Commission towards this Parliament.

SOUNDBITE (English), Jean-Claude TRICHET, President of the European Central Bank, We really believe that surveillance mechanisms and machinery which is very strong because we've seen what the deficiencies are... Independent entity preferably within the Commission is something we are very attached to. Greece case must not be repeated; we cannot afford again to experiment the absence of dependable diagnosis of the economic health of a country.