- Coeure says work needed on bank backstop, deposit insurance
- Euro members need to share more sovereignty on economic policy
The euro area’s method for managing 19 national economies won’t generate the growth needed to produce full employment and debt reduction, European Central Bank Executive Board member Benoit Coeure said.
“The governance framework as it stands today is not fit for the purpose of generating strong and sustainable growth that is required,” Coeure told reporters in Luxembourg on Saturday after a meeting of European Union finance ministers. “We need to further share sovereignty over our economic, fiscal and financial policies.”
Having helped rescue banks and governments from the euro’s sovereign debt crisis over the past five years, ECB officials are now pushing for a radical overhaul of the way the single-currency area works. ECB President Mario Draghi co-authored a report this year with four other heads of EU institutions which foresees greater joint-decision making in the short term and a euro-area treasury over the long run.
“The conviction of the ECB is that the Greek crisis was only the most recent illustration of the deep-seated issues in EMU governance,” Coeure said. “Looking further back the institutional framework clearly was not strong enough to induce fiscal and structural policies that would prevent imbalances. That’s what we want to avoid now.”
Coeure said ministers meeting in Luxembourg had had a “deep” and “balanced” discussion on moving forward on EMU reform. A first step would be an unambiguous commitment to the financial backstop for the region’s first bank-resolution body, an issue that needs to be resolved before the new organization assumes full powers on Jan. 1. Coeure also urged states to begin working toward a common deposit-guarantee scheme.
“The five presidents report provides the roadmap,” Coeure said. “It’s clear that completing EMU will only happen if we move in parallel on all fronts.”