ECB annual report for 2009 - Latest developments on international currency exchange rates (debate) 
President
The next item is the joint debate on the following:
the report by Mr Balz, on behalf of the Committee on Economic and Monetary Affairs, on the ECB annual report 2009, and
the Commission statement on the latest developments on international currency exchange rates.
Burkhard Balz
Mr President, ladies and gentlemen, we have just had a request for everyone to quieten down a bit. Perhaps certain Members could comply with that request.
Ladies and gentlemen, my report today essentially concerns the performance of the European Central Bank in 2009 - in other words, during a period in which economic, financial and, increasingly, also political actions, were substantially dominated by the economic and financial crisis. The crisis, which started off as a purely financial crisis, spread, and also affected the entire real economy in a second wave. Economic activity diminished worldwide, while falling tax revenues and increasing welfare expenditure as a result of the crisis led to increasing public deficits. Further measures to stimulate the economy also contributed to the level of debt. As a result of these increased deficits, governments throughout the European Union passed extensive austerity packages. In my opinion, these packages were necessary and, in some cases, even overdue. However, they constrained the capacity of the governments to act.
Although economic activity began to recover in the second half of 2009, the financial and economic crisis then threatened to evolve into a public debt crisis in a third wave in 2010. In my view, this danger has not yet been averted. In recent days, we have been reminded all too clearly by the case of Ireland that the problem of over-indebtedness in the Member States has by no means been resolved, and I therefore also agree with President Van Rompuy: the failure of the euro is out of the question. That is the current situation, however. My report deals instead with 2009, about which we can say that the ECB reacted appropriately - even well, in fact - to the challenges. Its measures proved to be widely successful and kept many financial institutions from collapse. However, the financial institutions did not always pass on the liquidity in full to the real economy, with the result that the full recovery potential of these measures could not be exploited.
Since these measures involved extraordinary steps, it is now essential that the measures are lifted judiciously and with careful planning. The problems in Greece and other euro countries may be, in part, home-made, but they also brought to light fundamental problems that existed within the economic and monetary union. The principles of the Stability and Growth Pact were infringed. We are now living through the consequences, and that includes what is going on in Ireland. These infringements must now be removed and new infringements must be prevented. The Stability and Growth Pact needs to be strengthened, and the economic and monetary union needs to be more in balance.
In the past, insufficient coordination of economic policies within the monetary union allowed considerable economic imbalances to arise between the euro area countries and left the euro area without a predefined crisis management mechanism. The euro area will have to resolve these imbalances if it is to prevent a new crisis. In the final event, however, the structural reform process - combined with the revision of the regulatory framework for financial policy - may strengthen the euro area. The issue of the independence of the European Central Bank will also be a significant aspect of the new economic governance, particularly as regards the recently established European Systemic Risk Board. Consequently, Parliament will continue to take its duty to review the performance of the ECB very seriously.
I am absolutely convinced that the European Union and the euro area will find a way out of this crisis and could emerge from it even stronger than before. However, in the coming months, we need to learn the right lessons from what has happened. This is a major challenge, but in its history to date, the European Union has constantly demonstrated that it develops best when it has to overcome challenges. This crisis therefore also represents an opportunity that we should exploit.
In closing I would like to thank all the shadow rapporteurs from the other groups for their extremely pleasant and constructive cooperation on this report. It is not something that can be taken for granted, but it deserves particular emphasis in this case.
Jean-Claude Trichet
Mr President, Mr Balz, ladies and gentlemen, I have the honour of presenting to you, as provided for by the treaty, the European Central Bank's Annual Report for 2009. Due to the schedule having been somewhat thrown out by the European elections in particular, I spoke to you last March about the previous annual report. This is therefore the second time I have addressed Parliament this year.
First of all, allow me to say how pleased I am about the support once again expressed by the European Parliament's motion for a resolution in favour of regular hearings before the Committee on Economic and Monetary Affairs and, more generally, in favour of maintaining close relations with the European Central Bank. I welcome this even more since, this year, the European Parliament has demonstrated very convincingly its willingness and ability to assert the overriding European interest, especially with regard to the financial supervision package.
(DE) I would like to start by giving you a brief overview of the monetary policy measures taken by the European Central Bank during the financial and economic crisis. Beyond the crisis period, I would also like to look back on the ECB over the first twelve years of its existence. Finally, I would like to look at the most pressing challenges that await us in 2011.
Mr President, let me first mention the action taken during the crisis.
2009 was a most challenging year for the ECB's monetary policy. It started with a severe economic downturn worldwide following the outbreak of the financial crisis in autumn 2008. In this environment of subdued inflationary pressures, we continued with our policy of lowering our key rates further. Overall, within a period of only seven months - between October 2008 and May 2009 - we lowered our main refinancing rate by 325 basis points. This brought our main refinancing rate to 1%.
To ensure that households and firms in the euro area would benefit from these most favourable financing conditions, in 2009 we also continued with - and even extended - our enhanced credit support to euro area banks. We did this in response to dysfunctional money markets that had weakened the ability of monetary policy to influence the outlook for price stability by means of interest rate decisions alone. Among those non-standard measures - as we used to call them - the most prominent is the full allotment liquidity provision through our refinancing operations with euro area banks against good collateral and at the main refinancing rate prevailing at the time for several maturities extending well beyond the weekly operations. In 2009, we also extended the maturity of our longer-term refinancing operation to one year. These were, of course, decisions of extreme importance.
As rightly emphasised in your draft resolution on the ECB's annual report, this enhanced credit support has been successful in avoiding what would have been - if additional dysfunctional tensions had been observed - a depression or a much deeper recession. Let me emphasise that all our action was fully in line with our mandate to deliver price stability in the medium term for the euro area as a whole. That we have been able to credibly deliver on our mandate is reflected in a favourable inflation outlook and well-anchored inflation expectations in the euro area.
Following some improvements in financial market conditions in the course of 2009, renewed market tensions erupted in a number of segments of the euro area bond market. Since the smooth functioning of the bond market is essential to the transmission of the ECB's key interest rates, we decided to intervene in the euro area's debt security markets with the aim of helping restore a more normal transmission of monetary policy to the economy. To this end, we introduced our Securities Markets Programme. To ensure that this programme does not impact on our monetary policy stance, we re-absorb all the liquidity injected.
To sum up, let me emphasise that all the non-standard measures we have adopted during the period of acute financial stress are temporary in nature and were designed with exit considerations in mind. Some of the non-standard measures initiated in 2009 and early 2010 have already been phased out in view of improvements in conditions in some financial markets and taking the ongoing recovery of the euro area economy into account.
Let me share with you for a moment a few thoughts on the track record of the euro. In my view, three elements are fundamental.
Firstly, the ECB has delivered what it was expected to deliver according to its treaty mandate, namely, price stability. Indeed, euro area average inflation over the past almost 12 years stands at 1.97%. This fully reflects our definition of price stability, namely, our aim to keep annual inflation rates in the euro area below 2% and close to 2% in the medium term. In this sense, the euro system over the past 12 years has operated as an anchor of stability and confidence and has done so during the most recent times, despite the challenging environment created by the global financial crisis.
Secondly - and reflecting favourably on the credibility of the ECB's monetary policy - inflation expectations have, as I have said, remained solidly anchored at levels in line with price stability.
Thirdly, this success is grounded, we trust, in the full independence of the ECB from political influence, in its primary mandate to maintain price stability and in its transparent communication, particularly concerning the definition of price stability. The ECB's two-pillar monetary strategy allows for a forward looking and medium-term oriented course of action that is underpinned by a solid analytical framework. That framework includes a thorough analysis of monetary and credit developments, taking the monetary nature of inflation over the medium to longer term into account.
We consider that this comprehensive approach allows for well-informed and consistent decision making, whilst being steady and looking beyond short-term volatility.
As regards the external dimension of the euro, let me only say that our currency has established itself internationally. In 2009, the euro represented around 30% of the stock of international debt securities and the stock of global foreign exchange reserves.
Speaking of the external dimension of the euro, I will say a word on the present foreign exchange rate issues, domains where I would call for great prudence.
There are two major topics. One is the relationship between the major floating convertible currencies of the industrialised countries, such as the dollar, the euro, the yen, the pound sterling and the Canadian dollar. These currencies have been floating since the collapse of the Bretton Woods system at the beginning of the 1970s. I should underline the strong view of the international community that excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.
Let me say that the ECB appreciates the recent statements by the US authorities, namely the Secretary of the US Treasury and the Chairman of the Federal Reserve, reiterating that a strong dollar vis-à-vis the other major convertible currencies is in the interests of the United States. I share this view entirely. A dollar that is credible among the major currencies of the advanced economies is in the interests of the United States, of Europe and of the entire international community.
The second topic concerns the currencies of emerging market economies which have current account surpluses and exchange rates that are not sufficiently flexible. On this issue, the international community agrees - and this was restated in Korea last week, as well as by the Commission - that moving towards more market-determined exchange rate systems, enhancing exchange rate stability to reflect underlying fundamentals and refraining from competitive devaluation of currencies are in the interest of the emerging economies concerned and of the international community.
The ECB used to say that this is no time for complacency. This is truer now than ever. The challenges lying ahead of us are manifold. All relevant authorities as well as the private sector must assume fully their responsibilities, and this is true for executive branches, central banks, regulators, supervisors, the private sector and the financial industry. In particular, the current crisis has clearly demonstrated that implementing ambitious reforms in economic governance is in the interest both of the euro area countries and of the euro area as a whole.
The proposals put forward by President Van Rompuy on the reform of the EU's economic governance and approved by the European Council meeting of October 2010 represent an improvement to the current surveillance framework at EU level and seem broadly appropriate for the EU countries not participating in monetary union. However, as regards the specific requirements of the euro area, in our opinion, they fall short of what we view as necessary to ensure the best possible functioning of the single-currency economy.
I am convinced that, over the coming months, the European Parliament will help Europe make the necessary quantum leap in economic governance a reality. With its legislative role concerning financial supervision and the ESRB, Parliament has shown its determination when it comes to major issues.
I would like to take this opportunity to thank you for this and to express again my conviction that the influence of Parliament will be decisive in the economic governance debate.
Another important challenge relates to financial regulation. We should take full advantage of the lessons of the crisis and maintain the momentum for financial reform. As advocated in your draft resolution, a speedy implementation of Basel III is of crucial importance. The Commission's legislative proposals on short selling and over-the-counter derivatives are also indispensable to making the financial system more transparent and resilient.
We are facing a decisive year. 2011 should see the adoption of the revised governance framework, in-depth discussions on the crisis management framework and possibly the launch of the procedure for a treaty change. We need to get all these reforms right, so as to ensure that Europe as a whole and the euro area can meet future challenges with even greater capacity and conviction.
2011 will be also the first year of the existence of the European Systemic Risk Board. As is called for in your draft resolution, we are doing our utmost to support the new body. At the same time, of course, the complete independence and the primary mandate of the ECB, enshrined in the Maastricht Treaty, are unchanged, and I have already stressed this point before Parliament.
We will continue to deliver on our mandate. This is what the treaty requires from us. You can trust that we will deliver what our fellow citizens expect.
Olli Rehn
Member of the Commission. - Mr President, let me first thank the rapporteur, Burkhard Balz, for the solid and comprehensive report on the ECB annual report 2009. The Commission welcomes the report, which reflects the key issues appropriately. The report recognises and praises the work done by the ECB in managing the crisis. The Commission shares this view; the ECB, under the leadership of President Jean-Claude Trichet, has navigated in this difficult situation skilfully and with a steady hand.
I want to use this opportunity to thank Jean-Claude Trichet for an excellent cooperation and especially for his crucial role during these turbulent times. The ECB has, both through its monitoring stance and its non-standard measures, been instrumental in the fire-fighting to overcome the crisis and thus in laying the foundations for sustainable growth and job creation.
Your report rightly stresses that the financial crisis has exposed the need for reinforced economic surveillance in the euro area. The Commission agrees with this, which is precisely why we have put forward several legislative proposals to reinforce economic governance in the EU, especially in the euro area.
We have also taken on board several suggestions presented in the Feio report to strengthen and broaden economic governance in the Union. The Committee on Economic and Monetary Affairs has received the Commission's proposals and is currently working towards achieving the ambitious deadline of June next year, which I appreciate and welcome.
Let me now turn to the second part of the debate, which is the latest developments in the international exchange rates. It is correct that volatility in foreign exchange markets has increased in recent weeks, with significant shifts in the value of major bilateral exchange rates.
The euro appreciated against the dollar since June this year due to stronger data for the euro area economy and due to further expansion of the US monetary policy. More recently, however, the euro has somewhat weakened against most currencies, as increased worries about the Member States' public finances - above all in Ireland - have affected the euro. In real effective terms, the euro is currently close to its long-term average following an overall depreciation this year from an overvalued level at the end of last year. Compared to the beginning of the year, the euro depreciation in real effective terms amounts to around 7%.
In the context of a slow recovery in advanced economies and large capital flows to emerging economies, many countries have aimed at weakening their currency or at least resorting to competitive non-appreciation. It is therefore important that leaders in the G20 Seoul Summit last week very clearly and strongly committed themselves to abstain from competitive devaluations of their currencies.
The G20 summit also agreed to work further on the rebalancing of global growth. An agreement had been reached to work on indicative guidelines. It is clear that exchange rate flexibility must play a role in the necessary rebalancing so that exchange rates reflect economic fundamentals, as was underlined by President Trichet. The Commission will continue to support this important strand of G20 work, which will also be one of the key focuses of the French G20 Presidency next year.
Finally, I need to inform you about an important development concerning the euro area. Yesterday, when the ECOFIN Council welcomed the request of the Irish Government for financial assistance from the EU, ministers concurred with the Commission and the ECB that providing assistance to Ireland is warranted to safeguard financial stability in Europe. EU financial support can be provided under a programme with a rigorous policy conditionality which is being negotiated currently with the Irish authorities by the Commission and the IMF, in liaison with the ECB. The programme will address the fiscal challenges of the Irish economy in a decisive manner and the programme will also include a fund for potential future capital needs of the banking sector. To redress stress in the banking sector, a comprehensive range of measures including deleveraging and restructuring will need to be taken to contribute to ensuring that the Irish banking system performs its role properly in the functioning of the overall economy.
The technical talks on an EU-IMF programme are now well under way and the negotiations can be concluded by the end of November. Apart from EU and IMF financing, I can inform you that the United Kingdom and Sweden have indicated that they stand ready to contribute to the programme through bilateral loans, which is welcome.
All in all, yesterday's decisions are a critical step forward in the joint efforts to stabilise the Irish economy and thus safeguard financial stability in Europe.
Jean-Paul Gauzès
Mr President, Mr Trichet, Commissioner, ladies and gentlemen, clearly, I join the chorus of praise for the ECB's work, and I shall not repeat what my colleague, Mr Balz, said or what is said in the resolution. In the short time allotted to me, I would simply like to say that we must consider our fellow citizens.
Why do I say that in this way today? Because, yesterday evening, on all the French television channels, a future presidential candidate made a spectacle of himself by tearing up a EUR 10 note that he had photocopied and enlarged, and showing that, by tearing up that note, he was tearing up the cause of all our ills.
Of course, that is not true. All that is needed is for us to make an effort, together, to communicate. The work that has been carried out in terms of supervision, organisation and regulation, to which you have referred, Mr President, is excellent. You know you have Parliament's support: you said so yourself. However, we have a real task on our hands with regard to those of our fellow citizens who do not understand the messages that are being conveyed.
Every day, the headlines in the press are of increasingly grim solutions and unlikely situations, and I can tell you that, on Friday, when I was out in the field, as we say in politics, I saw nearly 100 to 150 people. They all asked me the same question: what is going to happen with the euro? The fear felt by our fellow citizens is out of sync with what is being done, and done well, by the European Central Bank.
George Sabin Cutaş
Mr President, first of all, I would like to thank the rapporteur, Mr Balz, for his cooperation. I also welcome the fact that the European Central Bank has been granted the status of an EU institution following the entry into force of the Treaty of Lisbon.
Secondly, I would like to point out that there are considerable macro-economic disparities between the economies in the euro area, highlighting the need for closer harmonisation between economic and monetary policies. The Growth and Stability Pact is not an adequate instrument for resolving the current economic imbalances. One solution out of this deadlock could be to issue government bonds at EU level. This solidarity mechanism would provide stable financing for Member States in dire straits, would make budgetary supervision more effective and would significantly improve liquidity. The single currency should be supplemented with fiscal tightening and joint long-term debt.
The reckless behaviour of financial operators helped trigger the economic and financial crisis. In addition to this, the recent speculative attacks against certain Member States have made it difficult for the latter to borrow money on the international financial markets, thereby virtually affecting the stability of the whole euro area. I therefore think that a permanent mechanism is required to protect the euro area against speculative attacks. It is the European Commission's duty to monitor the activity of current credit rating agencies and to devise a structure for an EU-level credit rating agency.
We must also bear in mind that the austerity measures adopted by national governments could significantly reduce the chance of the European economy's recovery. This is why an EU-level economic governance model is required which will combine fiscal consolidation with the creation of new jobs.
The Commission must also propose specific targets for narrowing the competitiveness gap between EU economies and, last but not least, go ahead with investments in green energy.
Sylvie Goulard
Mr President, Commissioner, first of all, I join the chorus of praise for our rapporteur, who I think has outlined the issue very clearly.
In his report, he stresses the innovations afforded by the Treaty of Lisbon, and I really want to thank you, Mr Trichet, for having once again this evening reminded those of us who seem to be unaware of the fact - including, incidentally, those who signed it and had it ratified - that the Treaty of Lisbon includes a major innovation: we are going to be able to debate publicly, in this Chamber, the reform of the Stability Pact.
Under Mr Rehn, the Commission has drawn up a set of proposals that are on the right track and are rather courageous, especially in calling for discipline to be strengthened by taking account of the macro-economic imbalances that Mr Balz had, in fact, mentioned in his report. What is more, you refer several times, Mr Trichet, to a 'quantum leap', in other words, a real step forward in this governance.
I agree entirely with what Mr Gauzès said; when one goes out into the field, one almost wonders whether the proposals put forward by the Commission in September are completely relevant, whether account ought not to be taken of the crisis that is currently occurring in order to allow for as much progress as possible to be made. I would like to point out here that those who designed the euro never thought that we would simply coordinate economic policies in the long term. What was envisaged was political union, namely, an ability to take decisions while being supervised by Parliament.
For my part, what I find rather striking, when we speak to the citizens, is that we ultimately have motorists - the Member States - who are, at the same time, behind the wheel and by the side of the road acting as policemen. That is rather how the current system works; in other words, we are, at the same time, the driver, the person who issues fines and the person who is supposed to supervise the other cars. I do not think that there is a single country with road traffic like that. We would therefore like to raise the cost of fines a little and we shall work towards that. Thank you for having reminded us that we have already done so in practice with regard to the reform of financial supervision, in the general European interest.
Sven Giegold
Mr President, firstly, on behalf of my group, may I express my thanks to Mr Balz for the cooperative manner in which our deliberations were conducted. We were able to contribute certain suggestions to make the report even more balanced. The period 2009-2010 was characterised by extraordinary measures on the part of the European Central Bank, and in view of these extraordinary economic developments, I would like to thank Mr Trichet once again for taking these measures, particularly since they were not always well received within his own institution.
We have seen during this period that the Stability and Growth Pact is inadequate. Instead, we need effective coordination of economic policy that takes into account not just public debt but also private debt, and that deals with economic imbalances not just in deficit countries but also in countries making a surplus. Where prices are concerned we need to focus not just on consumer prices, but also on property prices, their speculative development and the creation of bubbles.
Above all - and we are constantly urging this - we need once and for all a framework for tax competition in the European Union. It is unacceptable to have huge austerity programmes on the expenditure side while countries continue to have unconstrained tax competition on the revenue side.
In particular, it is unacceptable - and impossible to explain to our citizens - that in such a situation as we now have, we are rescuing Ireland's banks, but not at the same time ensuring that its scandalously low rate of corporation tax, which stands at 12.5%, is corrected to the usual European rate of 25%. We need to have some straight talking here.
I would also like to ask Mr Trichet to comment on two matters in the report: the issue of transparency, as mentioned in paragraph 21, and the issue of the security accepted, as mentioned in paragraph 39. You have not yet commented on these issues. On behalf of all the rapporteurs and shadow rapporteurs, I would be grateful if you could comment specifically on these matters.
Kay Swinburne
on behalf of the ECR Group. - Mr President, I would like to congratulate Mr Balz on his report. However, at a time when the euro is facing new crises every day and it is generally accepted that new forms of governance and new rules are required for survival, it is hard for the ECB to weigh in on outside global issues.
Yet that could be precisely the problem. Until now, most of the large global players have succeeded in working together to seek solutions to the problems of the global financial crisis. The coordination in areas of financial services regulatory reform, particularly in areas like derivatives, has been unprecedented. But when it is national currencies that are being defended as opposed to multinational banks, there is a strong danger that multilateral coordination is going to break down.
If the ECB looks to protect the euro above all else, the Fed to protect the dollar and the Chinese the yuan, we will all lose out.
Since its inception, the ECB has done the difficult job of balancing different cultures and methods of monetary policy. I hope that, even while it is under intense internal pressure, it can use its expertise in these areas to enhance cooperation beyond the EU to a global level.
Jürgen Klute
Madam President, I would first like to express my heartfelt thanks to Mr Balz for such constructive cooperation. I can only emphasise the fact that despite coming from different positions, working together was a positive experience.
Many people thought - and I would like to underline this fact again here - that the crisis in the euro area was over. Ireland shows that this is not the case. Just as before, Europe is voluntarily offering itself up to the financial markets. The EU Member States are still having to offer their treasury bonds in the bazaar of the financial markets and try to gain the confidence of the speculators by adopting suicidal austerity packages. At the weekend, we saw once again where that leads us. This time it was not the Greeks, who were supposedly out to deceive everyone, but rather Ireland - the star pupil - that was forced to turn to the European bail-out fund in order to rescue its banking system - a system which had also long been held up as a shining example of deregulation.
In the meantime, the financial sector is already eyeing up Portugal for capitulation as its interest rates continue to rise. The European Central Bank must share the responsibility for this drama. It has failed and continues to fail to use eurobonds in order to offer a civilised alternative to this casino approach. While half of Europe is recovering from the crisis, the ECB idly stands by as the remaining part falls further and further into poverty and uncertainty. Ruinous cuts across the board by national economies may be to the taste of the European investment and banking giants, but they do nothing to help either Ireland or the monetary union and the ECB.
Please pay no attention to Mrs Merkel's simplified financial ABC, Mr Trichet. If you want to save the economic and monetary union, do not leave European treasury bonds hanging in the air. Introduce eurobonds before the speculators claim their next victim.
(The speaker agreed to take a blue card question under Rule 149(8))
Hans-Peter Martin
(DE) Madam President, I wanted to ask Mr Klute how his proposal for Europe-wide treasury bonds and eurobonds can be reconciled with the attitude of the German Federal Constitutional Court on such matters, and what he thinks the outcome would be were such a measure to be brought before the German Federal Constitutional Court in Karlsruhe.
Jürgen Klute
(DE) Madam President, I admit that that is difficult to assess. I cannot give an off-the-cuff answer to that right now. Undoubtedly, it is a tricky situation, but I think that things have now developed so far that a rethink might possibly take place. I am sorry, but I cannot give an off-the-cuff answer to that question.
John Bufton
on behalf of the EFD Group. - Madam President, I read the Committee on Economic and Monetary Affairs' report on the European Central Bank's annual report with great interest. The report acknowledges that huge disparities between Member States of the eurozone contributed to the problems we are witnessing. The report states that 'these imbalances pose considerable difficulties for a suitable monetary policy within the eurozone' and reiterates that 'the financial crisis in some countries within the euro area is a serious matter for the area as a whole', reflecting this 'dysfunction of the euro area'.
I strain to see the sense in calling for stronger coordination of economic policies within the euro area. The knee-jerk reaction has been to increase economic governance, but it is limitations of enforced commonality that have led particular Member States into financial crisis, combined with extraneous reasons as yet beyond our control. Perhaps the system does not allow for the necessary economic elasticity and self-determination to enable governments to deal with idiosyncratic problems effectively, such as rates of inflation.
The report lights upon this point, noting that the crisis and subsequent bail-outs and stimulus packages 'led to far-reaching austerity measures which ... heavily constrain the capacity of governments to act'.
One argument is that you cannot have a single currency without further homogenisation to iron out differences between Member States and levels of wealth. Yet any realist knows that this will not happen. It is contrary to human nature, which logically should shine forth in a democracy, however inconvenient.
Is the eurozone ready for Estonia in January? I raise my eyebrows at the statement that 'the adoption of the currency by Estonia shows the status of the euro', suggesting that this will 'encourage (other) Member States to seek membership'.
Ideological clinging to the euro will see monetary problems resurface in boom time and bust. A single currency only works in a tight-knit federal environment. Perhaps, with this being the Commission's ultimate intention, they have put the cart before the horse.
Although the UK is not in the eurozone, we suffer the effects of contributing to bail-outs and through the intricately entwined economics inside the Union, it is no use waiting for the 'I told you so' moment. It has already passed.
Hans-Peter Martin
(DE) Madam President, it would be good if this report by Mr Balz could be presented subject to a reservation, and that would be a reservation as regards memoirs. I think we might learn a lot more if you would present the chapter on the years 2008-2009 from your point of view, Mr Trichet. In the absence of such knowledge, we are working somewhat in the dark here, and there is reason to believe that there are many extraneous circumstances of which we are unaware at the present time. Nevertheless, you have stated that the longer-term financing measures have been extended once again, Mr Trichet. Perhaps that is a good thing. History will show us whether it was really such a good idea. We do not always have to point the finger straight away at Alan Greenspan.
There is just something that I am concerned about, and that is that our citizens are simply not being told what this liquidity aid is actually being used for, and the lack of transparency as regards the way that the Irish are being forced - in many people's eyes - under this umbrella. We know that Ireland has already received EUR 130 billion, EUR 35 billion of which has gone to the subsidiary of a German business - Hyporealestate. Just why is so much pressure being piled on at present? Why are we not in a position to say who the real creditors of the Irish banks are? Is it my life assurance with Allianz? Is it, in fact, the German banks, as is always being claimed? If that is the case, are we not having the wrong debate here? In which case, we should be honest enough to tell our citizens that it is they that we are bailing out, that it may be your own money that you made the mistake of investing in Ireland, in a banking world built on false foundations. This, of course, also raises the question of whether every Irish bank is really essential to the system. Why do we not have the courage to accept that one or other will fail? The Leman Brothers solution cannot always be the answer. We need the risks to be distributed fairly, because a large proportion of the earlier gains undoubtedly went into the private sector.
Ildikó Gáll-Pelcz
(HU) Madam President, first of all, I should like to congratulate the rapporteur on the splendid job he has done. Since the European Parliament is the primary institution through which the European Central Bank is accountable to European citizens, I am very pleased about President Trichet's participation in this plenary, and also that he regularly engages in monetary discussion with the Committee on Economic and Monetary Affairs.
The financial economy is global in nature. The crisis, too, is global. It is precisely for this reason that the solutions to the crisis must also be global. We cannot ignore the fact that the Member States' economic and financial problems still affect the euro in all its aspects. I once again agree with the rapporteur. Unfortunately, the EMU has not complied with nor held Member States accountable for compliance with all the principles of the Stability and Growth Pact. This is why we speak of government debt growth, and this is why we now see a new wave of the crisis, which is a government debt crisis.
I trust that the issues regarding the ECB's independence and its responsibility for decision making will be resolved in a reassuring manner, and that this, along with the reform programme aimed at creating a successful economic union, will help strengthen the European Union and the euro area within it. I am sure that we are able to learn from the crisis and from our mistakes, and that the crisis will create opportunities for us.
Robert Goebbels
(FR) Madam President, ladies and gentlemen, the euro is experiencing problems, but what convertible currency is not after the systemic crisis caused by crazy finance?
Government debt is a serious problem. Nevertheless, the increase in public deficits is a result of the public bail-out of private banks. What is more, the economy needed to be revived. The financial crisis has spread rapidly to the real economy, leading to a sharp downturn and unemployment.
It appears that the world of crazy finance has not learnt from the crisis. Wall Street and City survivors are speculating on the currency markets and short selling CDSs that they do not even have. The lending rates for States it is suspected may default must be raised by indirectly imposing austerity policies on them, which will make it even more difficult for them to recover.
European solidarity is being shown with difficulty and sparingly. The bail-out of Greece means, first and foremost, the bail-out of French and German banks holding a significant portfolio of Greek debts. The support given to Ireland is, above all, a bail-out of British and German banks that would suffer deeply if Irish banks were to go under.
The fact that the rate of the euro remains volatile is not a sign that the common currency is weak. It is a reflection of the tension in the markets, especially in the face of a currency war between the Americans and the Chinese.
Since the start of the year, China has no longer been borrowing in dollars, but has been selling them. The tax situation in the United States is worse than that in Europe. On top of federal public deficits, there are enormous private deficits. Forty-eight of the 50 states in the American Union have a deficit budget.
Mr Van Rompuy spoke about the euro struggling to survive. He is wrong. The euro, that beacon of stability that Mr Trichet has just spoken about, will outlive Mr Van Rompuy, because the Union and its supporting structure, the Euro Group, are the most important economic unit in the world. In spite of real problems, to which Europe is responding with continual shilly-shallying, it should be pointed out that, at world level, the 27 are the biggest exporters of goods, the biggest importers of goods, and the biggest exporters of services.
We have the most solvent internal market in the world. Furthermore, European companies export twice as much within the internal market as they do to world markets. The Union is the main destination for third-country direct investments. Companies in the Union hold the biggest investment stocks worldwide.
With 500 million citizens, or 7% of the world's population, the Union generates 30% of gross world product. The United States generates 25%, Japan 8% and China 8% of world product.
Our European Union, which also provides 55% of world development aid, could have more of an influence if our leaders had a little more political courage, if they used Europe's strength.
I will just end by saying that a strict and transparent framework must be imposed on international finance. We must work together to overcome our problems.
Sophia in 't Veld
Madam President, as has been highlighted by our colleague Mr Gauzès, some people hate the euro; they see it as the root of all evil and they cheer at the prospect of the collapse of the eurozone. But these people are wrong and they live in the past. The current troubles are not caused by the euro; on the contrary, the euro protects us from even worse. We need the common currency but we also need proper governance of the eurozone; loose cooperation on the basis of unanimity is not an option anymore.
Colleagues, we are on a ship with a giant hole in its side; it is sink or swim at this moment. But national governments still seem to think that it is enough to set up task forces and working groups and talk about maybe seeking closer cooperation, and then again maybe not. The good news is that they seem to be acting more decisively and more quickly in the case of Ireland, because swift action is needed and very welcome. This is not just about rescuing single countries: it is about the credibility of the eurozone. It is about the world testing us.
Are we willing and able to act? The confidence of the world in the eurozone is essential for the stability of our currency; the money in our pockets depends on the confidence that others have in us. So I therefore urge national politicians to stop playing the populist card, or indeed publicly tearing up euro notes, and instead take ownership and take responsibility for our shared currency.
Finally, a word about the austerity measures. They are much criticised, and some people even say that they will damage the economy. Of course we have to act with caution, but these measures are necessary to sanitise public finance in the long term and are also a sign of solidarity between countries in the eurozone. I think we should talk not only about the expenditure side but also about the revenue side, because there too, reforms - whether of the labour market, pensions or social security - are necessary and long overdue.
Peter van Dalen
(NL) Madam President, the European Central Bank has not known a year as eventful as 2009 since the euro was introduced. Tackling the crisis has cost a great deal of effort and this is still continuing. I think that we should have a better and stronger approach to tackling the crisis. The establishment of the European Emergency Fund is no structural solution. We will still have huge debts which countries like Greece or Ireland will never be able to repay. What really helps, however, are stringent, strict budgetary discipline and the accompanying automatic penalties. Fortunately, Mr Balz's report is very clear on that point. The Council should take the same approach in adapting the Stability and Growth Pact. Cutbacks are needed if we are to overcome the crisis. The majority of this House should also apply that principle to the European budget. The acceptance of the 2.9% budget increase is a very broad compromise already. No citizen will understand Parliament wanting still more and wanting further compromises. Therefore, do not do it!
Jaroslav Paška
(SK) Madam President, according to the minutes of the negotiations held between euro area finance ministers from the beginning of September this year, published by the Reuters press agency, you apparently stated, Mr Trichet, that if you had known that Slovakia would not agree to provide voluntary financial assistance to the Greek Government, you would never have agreed to Slovakia being accepted into the euro area. The project in question had the aim of protecting large financial institutions from extensive losses arising from Greece's inability to pay its debts, and, as far as I remember, you explicitly referred to it as a manifestation of voluntary solidarity.
Perhaps, Mr President, in your daily dealings involving billions of euro, it has escaped your attention that the amount of money you receive each month for performing your role is enough to cover the monthly living expenses of almost 100 families in my country.
Mr Trichet, if you really think that these families living on EUR 600 to 700 a month, or pensioners living on EUR 300 a month, should further reduce their daily food consumption only so that your colleagues from the banks and financial funds can keep their profits, pay out high bonuses and indulge themselves in ever greater amounts of caviar, then please do not call that solidarity.
I know that the situation in Europe is very complex, but Slovakia is definitely not a country that you are in any position to criticise.
Elisa Ferreira
(PT) Madam President, the intervention in Ireland ultimately proves that the EU should have come up with a common solution for European banks, particularly the large banks, almost before dealing with any other matter. In practice, today we are openly discussing the failure of states, yet we still do not have a clear proposal for a solution for European banks.
The intervention in Greece and the way it has developed prove that Europe needs European solutions, and the solution identified thus far is principally based on bilateral aid, whereby every country is subjected to the judgment of its partners based on criteria that are neither clear nor stable. The European Central Bank (ECB) has acted as an anchor in this situation, filling some of the gaps, particularly in terms of the vulnerability of sovereign debt. Make no mistake, however: we cannot continue like this in the medium term.
I would therefore like to ask the President of the ECB the following three questions. Firstly, what is the ECB's position on a stable model for constructing a true system of solidarity between the Member States with regard to sovereign debt? We need this, and we should not refuse to face up to reality. Secondly, what were the differences, if it is possible for us to identify them, which prompted the ECB not to endorse all the recommendations of the report compiled by the task force led by Mr Van Rompuy? Thirdly, does the ECB believe that the EU can survive with the increasing divergence of growth suffered by the Member States, and without a common instrument that restores some convergence in these growth strategies?
Seán Kelly
(GA) Madam President, as a Member for Ireland, I cannot say that I am too proud of what is currently happening in my own country. However, I am sure that most of our citizens want to do whatever needs doing in order to make things right.
And to put things right in Ireland, two things are necessary. Firstly, unfortunately we have had to turn to the support from the ECB and the IMF in the short term. Secondly, and more importantly, the supervisory architecture of the authorities in Europe needs to work effectively so that the cosy relationship between dodgy banks, sleepy regulators and weak governments does not happen again in the future. Thirdly, I just want to ask people to lay off a little with regard to corporation tax because, firstly, it is a matter of subsidiarity; secondly, other countries in the EU have similar rates; and thirdly, it would exacerbate a very difficult situation in Ireland at the moment.
(GA) So, I know that the people of Ireland are eager to get on with the job and that things will improve in due course.
Proinsias De Rossa
Madam President, Commissioner Rehn and Mr Trichet have given us more information here this evening than the Irish Government, which has misled us and lied to us for months. They have been more concerned to defend their historical legacy than to defend the future of our people's livelihoods, and indeed Ireland's and Europe's currency.
My appeal to Commissioner Rehn and Mr Trichet tonight is that they ensure that the timeframe for aid and the targets for deficits and debt are such that the social objectives of Europe are taken into account, as well as the need to ensure that Ireland's capacity to grow its economy and create jobs is not undermined.
Will you confirm also that you fully understand that increasing Ireland's 12.5% corporation profits tax is not a solution to Ireland's crisis, nor indeed Europe's current crisis, but could, in fact, create an economic and jobs wasteland in Ireland?
Olle Schmidt
(SV) Madam President, I would like to thank Mr Trichet and Mr Rehn very much for their absolutely excellent work in these turbulent times. I have a very specific question for you both. Back in my country, which does not belong to the euro area, there is currently a discussion taking place along these lines: 'This demonstrates precisely what we said when voting against the euro in 2001. It shows that we were right - the euro cannot work'.
This is, of course, an erroneous claim. I will therefore ask you two gentlemen a question. I believe that it is a key question and a key responsibility for the two of you to explain why Europe and the euro area have ended up in these difficulties. Is it because the euro area and the common currency have problems? Or is it because we have a number of politicians in the individual countries, in other words, in countries such as Ireland, Portugal, Spain and Greece, who have not actually done their job? Gentlemen, you need to explain this. Otherwise, I will never be able to explain it back home in my country.
Joe Higgins
Madam President, I would like to put a question to Mr Trichet. As President of the European Central Bank, why have you and the European Commission utterly capitulated to the speculators and assorted sharks on the international financial markets? You allowed them to engineer a panic in the markets over the Irish crisis - a panic designed to get you to intervene to guarantee the bond holders the billions that they gambled in bad debts. Because they threatened you that they would attack Portugal and Spain next, you and Commissioner Rehn utterly capitulated to a market dictatorship that is unelected, faceless and unaccountable.
Can I ask you to justify this? Private speculators and bondholders gamble tens of billions in private deals with private developers and private bankers in Ireland for private profit, and when the gamble fails, you support the pathetic government in Ireland to saddle working people, pensioners and the poor with the cost of this gamble. Now you have sent in the IMF as the shock troops for neoliberal capitalism to make the Irish people pay.
Morally, and in every other way, they should not pay and they must resist this disastrous attack on their services, living standards and democracy.
Gerard Batten
Madam President, my constituents in London simply cannot afford the GBP 288 estimated per family as their part of the contribution to the seven billion bail-out of Ireland. The Irish are the authors of their own misfortune: their government mismanaged their economy and fuelled a house-building boom unrelated to reality. But worst of all, they joined the European single currency.
The first step in solving their problems is to leave the euro; instead, Ireland has chosen to subject itself to financial governance from the European Union. The longer it takes to leave the euro, the worse the consequences of the exit will be. The same applies, of course, to Portugal, Italy, Spain and Greece and, no doubt, others. The only sensible thing that the late and unlamented Labour government did was to keep Britain out of the euro. A sensible thing that the coalition government can do is to stop throwing good money after bad.
Mairead McGuinness
Madam President, Mr Batten is right. The Irish Government horribly mismanaged our country, and it is a sad day for the Irish people that we are mentioned in this Chamber in these particular circumstances. But we are in a situation where we need solidarity. Perhaps Mr Batten does not understand that word, or that Ireland needs England as much as England needs Ireland and its economy.
We are all very much interlinked: let us not forget that.
Can I just ask some questions? Because in these emotional times, we need some cool heads and clear information.
Where stand the bank stress tests this evening, when the Irish banks appear to be absolutely overstretched and stressed out?
Secondly, there is a question for the ECB to answer about what its mandate is. I think that was inferred in the opening remarks, because there are interlinked relationships between all banks. Those banks from Germany and France and other countries who invested in Irish banks need to look at what they did and why they did it.
Lastly, there is political instability this evening in Ireland. It is regrettable, but it is necessary that we have a general election.
Liisa Jaakonsaari
(FI) Madam President, Robert Schuman, founder of the EU, said that the European Union would develop through a series of crises, and that development may now well be rapid, because there are quite a lot of crises around. This poses an enormous challenge to the political system in the European Union and the Member States.
It has to be said that Ireland's problems are partly due to the fact that the country has a weak government. The political establishment now has to be careful that the cure is not worse than the disease. For example, the representative of the Group of the Greens/European Free Alliance said here that the corporate income tax rate in Ireland should be raised to the European level, but that might actually be a death blow to Ireland, its growth and employment. The idea is to get the money back, in the form of growth and employment for Ireland, and not to punish the country. We need to help Ireland, not punish it.
Wolf Klinz
(DE) Madam President, Mr Trichet, we all know that the main task of the European Central Bank is to ensure monetary stability and that you can best achieve this aim by being politically independent. We have always supported you in this.
The crises of the last two years have shown that you have a further task, and that is to ensure the stability of the financial markets and of the financial system. This task, too, you have performed very professionally and convincingly. However, to do so, you have had to accept being yoked together with the governments concerned. In other words, you were not able to act with complete political independence here; instead, you had to work together with the governments.
I would be interested to know how exactly you would like to arrange this role in the future to ensure firstly, that you are independent, and secondly, that you can continue to perform this task properly without governments exploiting this opportunity to in fact undermine your independence.
Ilda Figueiredo
(PT) Madam President, the imbalances and disparities between economies in the euro area are being exacerbated, in spite of all the promises and proposals, and the question that arises is this: do you not think that it is time to review policies? Do you not see that insisting that countries with such weak economies adhere strictly to the irrational criteria of the Stability and Growth Pact is leading to greater disparities, inequalities, unemployment and poverty?
Do you not think that it is time to pay attention to social sustainability? One example is the situation in Portugal, where workers are to hold a general strike this week in protest at so-called austerity policies, which mean cuts in wages and investment, and which will trigger an even more severe recession. Do you not think that it is time to change policies and give full priority to social sustainability and create solidarity mechanisms, particularly ...
(The President cut off the speaker)
Olli Rehn
Madam President, honourable Members, first of all, I wish to thank you for a very responsible debate.
Mrs Jaakonsaari said that the European Union has always developed through a series of crises. That is largely true, and that is also the case this time, in the short term, while we have to be like the fire brigade and put out the fires that now blaze and threaten financial stability in Europe. At present, we are working mainly in Ireland to safeguard the stability of the European economy. At the same time, we are trying to build a longerterm European architecture that will actually strengthen economic union and reinforce monetary union, which is already sturdy at the moment, by means of robust and genuine economic union, which, in other words, means the implementation of the original objective for economic and monetary union.
Both are important tasks, and we cannot afford to neglect either. Instead, we have to be like the fire brigade the whole time, putting out the forest fires and, at the same time, building a new European architecture for better regulation of the financial markets and for economic union to function more successfully.
Ireland is in difficulties. Mrs Jaakonsaari is well aware that we in Finland have a saying that translates roughly as 'Help a man when he is in trouble, not when he is not': this also applies just as well to women, of course. It is now very important that we all keep a cool head and try and support Ireland while it is in difficulties. This is not just for Ireland itself but also for European economic stability, so that we do not allow the first green shoots of recovery to be harmed by this situation. It is important that we make it possible for the European economy to grow sustainably and for us to be better capable of ensuring employment. This is the very issue: sustainable growth in the European economy, and employment.
I want to thank you for the substance of the debate and indeed, I agree with Mr Gauzès that yes, we need to explain better why we are doing what we are doing, and we have to reassure our citizens. These are tough and confusing times. They are prone to nervousness and misinformation, and therefore we all need to do our share in communicating properly on the challenges. Here the European Parliament and all of you, as citizens' representatives, have a key role to play.
It is not about finding someone to blame: it is about strengthening the European construction that has protected European citizens from much worse consequences. Any talk of deconstruction of the European project is irresponsible. All the Member States would have been in a much more difficult situation without the European Union and its protective shield. The euro is, and continues to be, the cornerstone of the European Union; it is not only a technical monetary arrangement, it is indeed the core political project of the European Union. Therefore, it is indeed essential that we do our best, do our utmost, to protect and reinforce this European construction.
I want to conclude by saying that Mrs Goulard made a very important point when she referred to the original objective of those who created the Economic and Monetary Union: to have a very strong political dimension, in fact, a political union. President Trichet is better placed to testify on that than me because he was there then, but I would tend to agree, and that is why in our legislative package, which is now in your hands and in the hands of the Council, we want to supplement the strong monetary union by finally creating a genuine and strong economic union. To my mind, it is indeed now high time in the EMU to fill the 'E' with life, and that is what the legislative package on reinforcing economic governance in the end is about.
Member of the Commission. - (in response to Mr De Rossa, who had spoken with the microphone off.) Madam President, as you well know, I am ready to meet with the Irish MEPs to discuss issues related to Ireland, but - no matter how important and difficult the situation in Ireland is at the moment - this debate is about the ECB and Parliament's report on the ECB.
There have been so many questions during this discussion concerning Ireland that it is simply not possible to respond to all of them. As I said, I am ready to meet with the Irish MEPs and I hope I can meet with all of you tomorrow so that we can discuss this more precisely.
Jean-Claude Trichet
Firstly, let me say that the questions that have been asked are extremely pertinent and cover all the issues that are important today in great depth.
I will respond simultaneously to the Members of Parliament because a number of your questions converged.
First of all, I would like to restate: we are responsible for the 'M' of EMU, the monetary union. We have a sentiment on the 'E', economic union, but we are responsible for the 'M' and what we have been instructed to do by the people of Europe, by the parliaments that voted the Maastricht Treaty, is to deliver price stability. This is our mandate. We are independent to deliver price stability to 330 million fellow citizens.
As I explained a moment ago, we have delivered price stability in line with our definition, which was in the continuity of the best definition in the world, and let me say that our definition of price stability now appears to be the global benchmark. We have delivered price stability over the nearly 12 years of the euro and we are credible for the next ten years according to all the information we have.
So I want that to be very clear, because - as Olli Rehn said - many of the questions I have are questions that deal with the economic union, which is, of course, part of EMU, but we are not responsible ourselves for economic union. We have our ideas; we have our recommendations; we have our diagnosis and analysis and I will come back to that of course.
My second major remark: we are experiencing the worst crisis since World War II at a global level. Had we - both the central banks, including the ECB, and governments - not reacted rapidly and boldly, we would have experienced the worst crisis not since World War II, but since World War I, because we would have had a great depression and this fact - that we have avoided the great depression at global level - has called for immense action by governments and parliaments.
In our own analysis, the taxpayer risk that has been mobilised to help avoid a dramatic depression is approximately the same on both sides of the Atlantic in terms of GDP, approximately 27% of GDP. It was not, of course, utilised in terms of spending, it was even less utilised in terms of losses, if I may say, but nevertheless, it is an immense effort that has been made. Otherwise we would have had a dramatic crisis. Of course, this means that the global finance and the global economy is extremely fragile and we have to find ways at a global level to avoid this fragility.
But this is not a European crisis. It is the repercussion on Europe, on European governance, of a global crisis, and there is exactly the same kind of meditation and reflection on what to do in the US or in Japan, to mention only two other major advanced economies. They also have problems of the first magnitude and I would like us not to transform what is a legitimate reflection on how to run major advanced economies better into a criticism of the euro which, as I said, has delivered exactly in line with what was expected.
Let me also say that when I look at the finance and fiscal position, the fiscal position of the major advanced economies, I can say that Europe as a whole and the EU area in particular is in a better situation - Mr Goebbels said this - than Japan or the US in terms of public financial deficit. Perhaps something like around 6%, even a little bit less, as a consolidated fiscal position next year, when it is of the order of magnitude of ten or more in the two other major advanced economies.
I say that also for us to have an idea of the order of magnitude. So what we have is bad behaviour on the part of a number of countries that are creating problems in their own country and are creating financial instability. It is not the euro which is at stake; it is financial instability driven by bad behaviour of fiscal policies, of course, with the interaction with markets which is always there, as we are in market economies. Again, fundamentally, our diagnosis is that what was abnormal in the functioning of Europe was that we had poor governance, poor governance of the economic union.
I can say, sadly, that this is not surprising because the Stability and Growth Pact has been criticised wrongly by some since the very beginning. And I have to remind you that I was myself reporting in Parliament on our battle because major countries wanted to blow up the pact, or at least to considerably weaken it. Sadly, I have to say that this was the major countries inside the euro area and that the small and medium-sized countries were resisting this tendency. This was in 2004 and 2005. You will remember it was a fierce battle because it went up to the Court of Justice, and the Commission - and I have to pay homage to the Commission - was lucid, more lucid at the time than the Council, and we were fully supporting the Commission. So I have to remind all of you of that.
Now I have had a number of questions on precisely what we are calling for at this stage. I have to say that we already said, when the Commission made its proposal, that we thought it was not enough.
Taking into account what we feel, taking into account what we see, in the functioning of Europe as a whole, the 27 and the 16 (and tomorrow 17), we considered that the first proposal of the Commission was too weak in terms of automaticity and in terms of rigour of the governance, both for the fiscal surveillance and for the competitiveness indicators, the imbalances.
So, to the extent that the present state of the proposal which is made by the Council is even weakening the Commission proposal, we cannot say anything to you, honourable Members of Parliament, but that we trust that we are up to the demands of the situation; and the demands of the situation are that we need very strong surveillance, very strong governance.
In 2005, on behalf of the Governing Council, I said that we were not satisfied at all by what was, at the time, the position of the Council, and what was finally accepted.
So I do not want to go further because we will have a number of occasions to be in contact with Parliament. I have, of course, noted what Mrs Goulard said in terms of very hard work of Parliament, together with the Council and the Commission, to work out what will finally be the position of Europe. But again, our message is very clear on that.
Now let me turn for just one minute to the issue of communication. We have, of course, to permanently improve our communication. We try to do that. Let me only say that as regards our own communication, we are giving the clear definition of price stability which permits everybody to judge what we are doing permanently in real time.
I would also like to say that we were the first big major central bank to introduce press conferences immediately after the Governing Council. We were the first to publish an introductory statement which is our diagnosis of the situation. So we try to be as accountable in terms of communication as possible.
The only thing that we do not do is to publish the individual position of the various members of the Governing Council. We trust that it is very important that for the institution which is issuing a currency for 16 states that are united in Europe, but are still sovereign states, it is better that it is the Governing Council as a whole which appears to be the pertinent entity in terms of our decision.
Now there were a number of very important questions. Let me only mention the remark that we are responsible for the 'M', but to the extent that the 'E' is in the hands of the governments and of the Commission, we have in this domain, of course, to take into account the 'E', as always, as any independent central bank does: if the fiscal policy is sound and reasonable, the burden on the monetary policy to deliver price stability is light. If we have a bad fiscal policy, then we are overburdening the decisions that have to be taken by the central bank.
I would say it is the same for us in terms of interaction with the governments, but we are fiercely independent and the fact that we have had to embark on a number of non-standard measures, as I have explained, was to allow us to transmit our monetary policy impulses as well as possible in circumstances where markets were not functioning correctly and therefore, the decisions that we were taking on interest rates were not transmitted correctly to the economy as a whole.
This is the essence of the non-standard measures, to help restore a more normal functioning of the monetary policy transmission channels and we very clearly made the distinction - I repeated that in a recent colloquy we had in which Ben Bernanke participated - between the standard measures that are really what counts in terms of monetary policy stance, and the non-standard measures designed to help the transmission of monetary policy.
Now let me only say that I also noted the important question ...
(FR) With regard to Mr Gauzès's question on communication, which I believe others have repeated, there is a tendency, in some communication channels, to consider Europe as some sort of scapegoat. If things go wrong, it is Europe's fault. We know that this is not true, and the European Parliament, of course, knows it better than anyone.
There is also a tendency to say that if things do not go well, it is the Commission's fault or it is the fault of the European Central Bank or, better still, it is the euro's fault. This is the classic scapegoat phenomenon. The euro is the currency that has maintained its internal and external stability remarkably well. Moreover, I have not yet said that it is more remarkable than anything a central bank has ever done, within the founding countries of the euro, over the last 50 years - I saved that for last, if I may say so. I believe that we have here a currency that is, in fact, solid, and solid in historical terms, too. Therefore, let us beware of the scapegoat phenomenon.
I have to say that we all need to work very hard in terms of communication, but I also address that message to the European Central Bank and to the euro system as a whole; in other words, to all the national central banks that belong to the euro area. Moreover, I would say that this is also undoubtedly a problem faced by the 27, and hence a problem for the European Union as a whole.
(Applause)
President
Thank you very much for your detailed answer, Mr Trichet. I think at this point it is necessary to give a more detailed answer than is usually the case in this House.
Burkhard Balz
Madam President, I, too, would like to express my great thanks to Mr Trichet, Commissioner Rehn and, above all, the Members of this House for such an open and comprehensive debate. It has been highly objective, even if, towards the end, our honourable Members from Ireland sometimes let their emotions show through - which is quite understandable.
In the brief time that I have available, I would like to mention three points. The first is the independence of the European Central Bank. I believe it was right and vital for the Heads of State or Government - under the general leadership of Helmut Kohl, a revered citizen of Europe and, at that time, the German Chancellor - to have instigated the independence of the ECB. The European Central Bank is the guardian of the euro. I believe that the euro has been as stable as it has in the recent months of the crisis precisely because, in the final event, we have such an ECB. I would therefore ask you, Mr Trichet, to continue to act as independently as possible in the months ahead. If people express their opinions to you, by all means listen to them; but in the final event, the president and managing board of the ECB must safeguard this independence.
Secondly, we need to be more open with the citizens of the European Union. This is a important point. Above all, we should not always provide them with information in the language of Brussels, for which we have come in for some criticism, but in such a way that it is genuinely understood by those to whom we are sending the message - the people of Europe. As far as I am concerned, that is a very important point.
Finally, Mr Trichet mentioned Basel III. This is another thing that I would certainly emphasise. We want to implement Basel III promptly. However, I only want to implement Basel III promptly if everyone at G20 level implements it simultaneously. We cannot have Europe taking the lead once again and being the sole trailblazer, to the great detriment of our international competitiveness. I would therefore argue that Europe should actually implement this together with its partners worldwide, or else consider what the alternatives are.
President
The joint debate is closed.
The vote will take place tomorrow.
Written statements (Rule 149)
Elena Băsescu
I, too, would like to congratulate Mr Balz for all his efforts in compiling this report. The austerity packages proposed for exiting the crisis should not result in measures which could jeopardise economic recovery. I believe that a balance needs to be struck between the economic consolidation process and the protection of investments through jobs and sustainable development. The lesson provided by the Member States which have entered the euro area unprepared must make us think seriously about setting realistic deadlines over time. In the current situation, a delay of one or two years may be acceptable. Enlargement must continue, with the prerequisite of meeting the Maastricht criteria. In this respect, I believe that adopting the euro should not be seen as a momentary solution, but as being part of a medium-term wide-ranging political strategy.
Edward Scicluna
in writing. - I welcome and support this report. However, we should keep in mind that, once all the talk about fiscal consolidation, regulation and macro-economic governance ends, we must examine what effect this has had on economic activity - which is the bottom line of any discussion. The reality is that we need good and effective regulation and better economic governance so that small and medium-sized businesses, which are the main driver of economic growth, develop and grow. The sad truth is that these businesses have suffered greatly in the past two years. As a result, we have high and rising unemployment. The ECB's policy of pumping in billions of euro to help save indebted banks was the right thing to do, but many banks have become over-reliant on the ECB's liquidity. So now we have a situation where banks which provided credit too readily in the boom years are refusing to grant credit to small businesses. If this continues then we will not have the growth needed to reduce budget deficits and government debt levels. Unemployment will rise, and our economic performance will stagnate. Let us act wisely if we do not want to fail the people of Europe again.
