WOLFGANG Schäuble, German finance minister, wants a European monetary fund to be backed by tough sanctions to enforce budgetary discipline, with countries failing to comply facing expulsion from the euro zone “as a last resort”.
Mr Schäuble addressed his critics in an article in the Financial Times by declaring that Greece’s debt crisis had shown the euro zone’s rules were obviously “still incomplete”.
His argument comes after several days of debate within the German government, with France and with other European Union partners, some of whom question the need for an alternative to the International Monetary Fund.
Germany’s national central bank signalled its opposition to any proposal that would distract euro-zone governments from current efforts to bring Greece’s public finances back under control. Axel Weber, Bundesbank president, described discussions about the “institutionalisation of emergency help” as “not helpful”, and said they could even prove “counterproductive”.
But Mr Weber did not object to measures strengthening the implementation of the EU’s fiscal rules, and on Wednesday, Jean-Claude Trichet, the European Central Bank’s president, stressed it had not rejected the idea of an EMF.
Mr Schäuble said his idea was “in no way” meant to deal with Greece, which has signed up to austerity measures. Nor was it meant to influence debate about greater co-ordination of economic policy.
In a nod to the plunge of investor confidence in Greece, Mr Schäuble warned the euro zone was “unprepared” for any “severe situations” demanding comprehensive intervention by members to stop a market crisis spreading. While the IMF in Washington had assumed this job in similar crises, its intervention in the euro zone was “not without its problems” as one member’s monetary policy was also that of 15 other nations. – (Copyright The Financial Times Limited 2010)
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