Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-07-09-Speech-3-007"
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"en.20080709.2.3-007"2
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Mr President, Mr Trichet, Mr Juncker, all eyes are on the European Central Bank. The current uncertain economic situation and financial unrest are putting the ECB under great pressure. I am convinced that last week’s interest rate rise was the right decision. Inflation is a scourge which redistributes assets unfairly. Europe’s political leaders should be grateful that they have an independent central bank which is prepared to act in order to prevent Europe from lapsing into stagflation, low growth and rising inflation.
Ten years after its introduction, the euro is a world currency. The security and stability which it has brought to the euro zone and the Union as a whole, including my country, and even to the global economy are something no one could have dreamt of. Ireland’s ‘no’ in the referendum was not a reaction to the strength of the euro. Asymmetric development of economies between the euro countries may constitute a risk, but it can be remedied by holding fast to the requirements of the stability pact for sound state finances and continued structural transformation in the Member States.
At the same time there is some point in reviewing, after 10 years, how the ECB operates; scrutiny, transparency, decision-making and the international role of the euro could be improved. The committee therefore proposes that the ECB should present a new proposal on how decision-making can be made transparent and more effective as the Eurogroup grows. The ECB should give an account of the discussion between Members of the Governing Council when decisions are taken on the interest base rate in order to increase transparency and enhance predictability. Its role as leader of the Eurogroup should be strengthened in order better to reflect the significance of the euro in the international context as well.
Giving the market better information on the ECB’s interest rate decisions has long been crucial to Parliament, as is also the publication of the minutes and voting outcome. The ECB has refused this, however, pointing out that it would create national divisions within the ECB management.
Mr Trichet, we have listened to your views, and the committee is now presenting an amended proposal. The ECB management must provide clearer information after an interest rate decision, i.e. must state whether unanimity was achieved without a discussion or whether there were difficulties in reaching a common position. This would be an important step forward in improving the dialogue between the market, us politicians and the ECB.
Inflation has risen to record levels and now stands at around 4%, which is significantly higher than the inflation target of around 2% in the medium term. Not only the dollar but other currencies too have weakened considerably against the euro, which has revived the discussion on the exchange rate. The enlargement of the euro zone gives the monetary area more weight, but at the same time poses several challenges, since decision-making becomes more unwieldy and differences in economic development between the members increase.
The crisis on the housing loan market has shown that financial stability is a global issue, since crises are no longer limited to a single country or a single region. The combined efforts of the Federal Reserve and the Bank of England have contributed extensively to keeping the financial system afloat, but they have not resolved the crisis. This has also made clear the need for better cooperation between central banks and other institutions. The fact that the ECB and the Fed both warned against underestimating the risk of a crisis on the housing loan market, without any great success, shows the increasing vulnerability of the world’s financial markets. Here there is good reason to act, which Parliament among others is now doing, for example by following up the Lamfalussy process to modernise the European supervisory structure.
The common monetary policy and the ECB will face great challenges in forthcoming years. I am convinced that the EU leaders and the ECB will stand the test. At the same time, however, all the EU leaders must understand that price stability and sound state finances are the pillars of growth and new jobs. It is remarkable therefore that the French President, not least in his current role as Council President, questions the ECB’s stability targets. In my opinion Europe’s leaders should instead explain, in an open dialogue with their citizens, the purposes and goals of the monetary policy. Soaring prices and compensatory wage increases are the worst enemies of prosperity."@en1
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