The president of the European Central Bank has called for a fundamental strengthening of economic governance in the eurozone.
Jean-Claude Trichet said the financial crisis had demonstrated the importance of broader surveillance of macroeconomic policies across member states.
“Given the large spillovers from the macroeconomic policies of one country to other members of the single currency, much needs to be done,” he said.
Mr Trichet said he was in favour of the creation of an early warning system to identify unsustainable policies but said the extent of reforms in this area planned by the European Commission – while positive - did not go far enough.
“We need to go further still,” he said in an address to the Economic Club of New York.
Mr Trichet said the eurozone was now at a stage where it needed to remain bold and to enact those reforms envisaged when the crisis was at its deepest.
"It was then that we witnessed the clearest manifestation of risks and our judgement was sharpest. It would be a big mistake if, with gradually improving conditions, we fell back into accepting the status quo."
Mr Trichet said surveillance of fiscal policies to prevent excessive deficits and unsustainable public debt was of paramount importance.
"It is essential to establish sound procedures to enhance and enforce fiscal surveillance in the euro area," he said. "We need shorter deadlines under excessive deficit procedures so that corrective policy action is taken in good time."
He would not make any commitments to easing monetary policy further in response to possible stimulus measures from the US federal reserve.
But he added the central bank would take whatever steps are needed to ensure the European recovery remains on track.
"I never take, on behalf of the governing council, any precommitments. I only say we will do whatever is necessary," he said.
