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17 August 2011

Sharon Bowles MEP comments on the eurozone debt crisis


Sharon Bowles MEP, Chair of the European Parliament's Economic and Monetary Affairs Committee, comments on the eurozone debt crisis: "Too little, too uncertain, too late - that has been the response of EU leaders to the eurozone debt crisis".

"One reason for me being at the forefront of pushing for more action has been an awareness of the conflicting views forming the headwind they have to move against. Delay has neutered the measures taken, and now options that many thought improbable have moved centre stage. Consequently, I have requested an early recall of the Economic and Monetary Affairs Committee to discuss the situation. 
 
“The intervention by the ECB to buy Spanish and Italian bonds is welcome and the €22 billion size revealed for the first few days should not be a surprise. Market sentiment shows a hole in the size of the deployable amount of the EFSF (European Financial Stability Facility). That hole has to be filled somehow if leaders cannot yet move. The ECB is one mechanism, and it has the advantage of being quick, which the EFSF is not. I also posit revisiting the need for the AAA rating of the EFSF, as a lower rating would free-up more of the €780 billion pool than the current €440 billion maximum.   
 
“Analysis estimates the size needed for the EFSF has now escalated to €3.5 trillion - I myself have been calling for an increase to at least €2 trillion - aiming at a deployable fund in excess of €1 trillion, but beyond that I query whether it is wise, what with the current working of the guarantee arrangements and the AAA hang-up. Eurobonds look more efficient, and work to that end must be commenced so they can be ready as the ‘last resort’, which Merkel and Sarkozy acknowledged yesterday.
 
“It is eminently clear that more economic governance is needed, especially within the eurozone. However, this must be additional to the legislative proposals underway, not a weaker, intergovernmental replacement. It should, as far as possible, mesh with, and be a unit within, the Community so as to fulfil the obligations of interconnectedness that the single market, especially that in financial services, imposes.   
 
“In the economic governance package, waiting for final agreement between Council and Parliament, the Council has not yet conceded reverse qualified majority voting in the Stability and Growth Pact, as wanted by the Parliament. The lessons of the past and of the six pack negotiations indicate that the new legislative role given to the Parliament on multilateral surveillance should not be avoided. Indeed, radical, effective and far-reaching mechanisms have been more the meat of Parliament’s than eurozone Member States’ thinking.”

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