The European Central Bank (ECB) should take inspiration from the US Federal Reserve and broaden its mandate, former finance minister Ruairi Quinn said yesterday.
Mr Quinn, the Labour party spokesman on enterprise, trade and employment, was addressing the fourth Infiniti conference on international finance in Trinity College Dublin yesterday.
"The policy independence of the ECB was modelled on the Bundesbank, which was founded in reaction to the events of the 1930s and 1940 and the horror of inflation that that produced," Mr Quinn said. "I would like to now see an evolution that sees the ECB beginning to have dialogues with heads of state about the economy."
Mr Quinn said, while the ECB's final right to take interest rate decisions should be respected, it needed to take employment and economic growth into account when setting those rates.
When asked if he supported tax harmonisation, Mr Quinn said monetary union made it more important that taxation policy was independent of Brussels.
"Taxation is the only policy still subject to national sovereignty. If we had tax harmonisation but suffered an economic shock, the only alternative would be cuts in expenditure."
In the conference's opening address, the EU commissioner for internal markets, Charlie McCreevy, defended globalisation and hit out at excessive financial reporting requirements.
"Over the past couple of months we have seen a surge in protectionist rhetoric from certain quarters in Europe but also elsewhere in the world," he said.
He added that he would "not hesitate to open infringement proceedings" against EU member states that attempted to stop the integration of financial markets.
The EU's response to financial globalisation and scandals had been more measured than in the US. "Our reaction to the Parmalat scandal was not a Sarbanes-Oxley Act but a set of measured requirements that mean that, if listed companies have 300 special purpose vehicles offshore, they explain precisely to their shareholders why, and in the same breath tell them which corporate governance code they follow."
The conference, run annually by Trinity College Dublin School of Business and the Institute for Integration Studies since 2003, addresses issues relating to financial market stability and integration. It continues today.
