ECB's Coeure Tells FT EU Fiscal Union Is a `Necessity'

European Central Bank executive board member Benoit Coeure sees increased economic integration in the European Union as an essential step toward stability, the Financial Times reported, citing an interview.

Coeure, who is responsible for the ECB’s market operations, told the FT that his answer to people who are in doubt about “the necessity of fiscal union” is that “if they want to keep the euro and have the benefits that the euro has brought to their economies, they have to make steps towards a fiscal union.”

Europe is in the third year of an economic crisis and reaching a point where “deeper questions are being asked,” the FT cited Coeure as saying. Central to those questions is the shape of a future banking and fiscal union to bolster the monetary union, Coeure said, according to the newspaper.

Without such strengthening, “the system will not be stable and we will continue to experience crises,” Coeure told the FT.

Couere said a cut in the ECB’s main interest rate -- at 1 percent since December -- was “discussed at the last governing council meeting,” and that he “would expect the next council to discuss it again,” the FT reported.

While he supports using the EU’s bailout fund to intervene in government bond markets as a stopgap measure, he is not eager for the ECB to take on that role, saying that the Securities Markets Program isn’t considered “the best instrument to use at the current juncture” because it’s not advisable to “mix the central bank with the fiscal authorities,” he told the newspaper.

To contact the reporter on this story: John Simpson in Toronto at jsimpson12@bloomberg.net

To contact the editor responsible for this story: Greg Chang at gchang1@bloomberg.net