FRANKFURT (MNI) – For the euro to succeed, countries must take
seriously with the responsibilities linked to the benefits they receive
from membership, European Central Bank President Jean-Claude Trichet
said Monday.
The single currency area must ensure adherence to the convergence
criteria in a sustainable way, the president said according to remarks
prepared for delivery in Tallinn, Estonia and provided in advance by the
bank.
Estonia’s experience prior to euro adoption might encourage other
EMU states to tackle the necessary fiscal and economic reforms, the
central banker said.
It is essential for the Baltic state to adopt “appropriate
policies” in order to fully take advantage of the benefits of the single
currency and “to allow adjustment mechanisms to operate efficiently
within the enlarged euro area,” Trichet said.
More broadly “The success of the euro depends on all euro area
countries seriously engaging with the responsibilities that go hand in
hand with the considerable benefits that euro area membership offers,”
Trichet added.
He said the ECB welcomes Estonia’s commitment to ensure an
environment “conducive to sustainable output and employment growth, with
balanced macroeconomic conditions, including price stability,” after the
euro is introduced on January 1, 2011.
The experiences of Estonia and other EMU states in recent years
“highlight the importance of rigorous and effective surveillance inside
the single currency area,” Trichet said.
“In line with the [Maastricht] Treaty, the ECB attaches great
importance to the notion of sustainability,” Trichet said.
Failure to do this with respect to new Eurozone states would
“inevitably result in serious economic challenges for the newcomer and
would possibly also have negative consequences for other euro area
countries, or even for the euro area as a whole,” he cautioned.
“That is why a thorough and diligent approach to ensuring adherence
to the convergence criteria on a sustainable basis is in the interests
of all current and prospective euro area countries,” he argued.
Trichet pointed out two “key aspects” of the country’s journey to
euro adoption, its maintaining of a “sound fiscal record” and the
importance of both prevention and, “if necessary, decisive correction of
economic imbalances.”
“The Estonian experience may encourage some euro area countries to
tackle the pressing need for adjustment that they currently face and
inspire Estonia, as well as current and other prospective euro area
countries, to contribute to a sustainable functioning of Economic and
Monetary Union in the years ahead,” he argued.
Trichet also said he is confident that Estonia will make an
“important contribution” to a strong and effective governance framework
at both the EU and Eurozone level.
“Recently, the ECB has set out a number of proposals for
reinforcing economic governance in the euro area,” Trichet said.
“These proposals, which are to be followed up by the Task Force
chaired by [European Council] President [Herman] Van Rompuy, identify
what is needed to strengthen governance and enforcement structures in
the economic policy framework for the euro area,” he added.
“They require a ‘quantum leap’ in terms of progress towards
strengthening the institutional foundations of Economic and Monetary
Union. It should contribute to a deeper economic union that is
commensurate with the degree of economic integration and interdependency
already achieved through monetary union,” he urged.
Repeating what he said Sunday night in Tallinn, Trichet said that
the expansion of the Eurozone from 11 countries on January 1, 1999 to 17
at the beginning of next year is the best way to show that the Eurozone
is not a “closed shop.”
Rather, it “is open to those countries and economies that are fully
compliant with the entry criteria in a convincing and sustainable
manner.”
–Frankfurt bureau; +49-69-720142; tbuell@marketnews.com
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