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Europe's central bankers said over the weekend their governments had at best
bought time with a US$1 trillion rescue, and called for radical action to curb
budget deficits and harsh punishments for those who strayed.
"There is a need for a quantum leap in the governance of the euro area,"
European Central Bank President Jean-Claude Trichet told Der Spiegel magazine.
Echoing his call, ECB Executive Board member Juergen Stark said turbulence in
the eurozone would calm down only if member countries reformed their economies
and cut their deficits.
"We have bought time, nothing more," he said in an interview with the
Frankfurter Allgemeine Sonntagszeitung.
Eurozone governments agreed a 750 billion euro rescue two weekends ago to end
a crisis of confidence in the euro triggered by financial problems in Greece,
which had threatened to envelop the region's much bigger economies.
Trichet said financial markets were in their worst situation since World War
II and possibly even since World War I.
But he indicated that governments rather than currency markets bore
responsibility for the euro's slide, which took it to an 18 month low against
the US dollar last Friday.
"It is not an attack on the euro," Trichet said. "It is clear that it is the
primary responsibility of the Europeans to take the appropriate measures in
order to counter the present severe tensions which have erupted in Europe."
Trichet has long urged eurozone governments to cut budget deficits to stop
debt piling up.
The failure of the Greek government to take this advice led to a debt crisis
that risked spreading to other eurozone countries with similar problems.
"There need to be major improvements to prevent bad behavior, to ensure
effective implementation of the recommendations made by 'peers' and to ensure
real and effective sanctions in case of breaches" Trichet
said. |
