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Economic governance: discipline and incentives


25 Jan 2011


Euro & Finance

Today's debate in the European Parliament Economic and Monetary Affairs Committee on the economic governance package, strengthening compliance with the Stability and Growth Pact, reinforces the common will to push for a long -term, coherent and extensive reform of the way we prevent and monitor macro-economic imbalances in Member States.

Sylvie Goulard (Modem, France), ALDE committee coordinator and rapporteur on the effective enforcement of budgetary surveillance in the euro area, made it clear stating: "The experience of the first ten years of the Euro, as with the crisis, points to the need for a more comprehensive approach that combines discipline and fight against macro-economic imbalances in the euro area. While sanctions remain a necessary instrument against Member States breaching the rules, incentives should be the other side of the coin. We need to equip our system with virtuous instruments that combine discipline and incentives, like Eurobonds. The creation of a global liquid Eurobond market would strengthen Europe´s global role."

"We also need more transparency and accountability in the decision making process during all stages of the mutual surveillance procedure between European institutions.  Even more importantly, we must increase cooperation with national parliaments, required to sign off their countries´ policies." she concluded.

HAGLUND_90.jpgCarl Haglund (Svenska folkpartiet, Finland), ALDE rapporteur on the enforcement measures to correct excessive macroeconomic imbalances in the euro area said: "The macroeconomic surveillance framework is the real novelty in the economic governance package. Member States have been able to ignore macroeconomic imbalances for too long and the consequences of this have become painfully evident. If we do not seize this opportunity to really improve the economic governance framework, chances are that we go back to business as usual once out of the crisis. But the fact is that we cannot afford to let Member States continue to ignore and postpone necessary reforms."
"The lack of confidence in the eurozone will not be solved alone by dealing with the challenges on the bond markets. A credible economic governance framework is an absolute prerequisite for finding our way back to sustainable public finances and for showing that prudent fiscal policy is a part of the European economic model." he concluded.

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