European Central Bank president Jean-Claude Trichet does not fully support new EU fiscal rules agreed in a deal between Germany and France, a central bank spokesman said today.
"It is correct that the president of the ECB does not subscribe to all elements of the report," an ECB spokesman said following a report in the Financial Times that Mr Trichet wanted the draft proposals scrapped because they did not include a line on his objection to parts of the plans.
EU finance ministers agreed on Monday to toughen the region's budget rules to prevent future sovereign debt crises after an agreement struck in France between president Nicolas Sarkozy and German chancellor Angela Merkel, which diluted initial plans.
Mr Sarkozy backed German calls to amend EU treaties to strip persistent deficit sinners of their voting rights and Mrs Merkel accepted French demands to water down sanctions on deficit sinners.
Under the proposals rule breakers would face sanctions only six months after being warned, ignoring the ECB's persistent calls for semi-automatic punishments for budget offenders.
It will now take a political decision by a qualified majority of euro zone governments to start disciplinary action against any state with an excessive deficit or debt level, and a majority of countries can still block any financial sanction.
ECB vice-president Vitor Constancio told reporters in Frankfurt yesterday that the central bank wanted tougher rules, a sentiment matched by fellow ECB board member - and one of the architects of Europe's original fiscal rules - Juergen Stark.
ECB recommendations for stricter fiscal governance published in June reveal the reason for the bank's dissatisfaction.
It called for a system of semi-automatic punishments for countries running up debts, including stopping access to European funding and aid as well as non-financial measures such as suspending voting rights.
The semi-automatic nature of the rules would mean member countries would have to voice their opposition before the EU would consider halting the sanctions process.
Reuters