14 March 2005

Speech Trichet: Testimony before the EP EMAC Committee

Jean-Claude Trichet told MEPs on Monday that any weakening of the corrective arm of the Stability and Growth Pact would weaken the whole of the Economic and Monetary Union. During his quarterly appearance before the European Parliament's Economic and Monetary Affairs Committee, the European Central Bank President also stressed the best way for the ECB to support economic growth and job creation was to maintain credibility in ensuring price stability.

Responding to MEPs' questions, Mr Trichet repeatedly emphasised the importance of the Stability and Growth Pact. 'For any central banker, the sounder the handling of budgetary policy, the better, but there is a second point: with a single currency for 12 states without a federal budget or a political federation, the Pact is crucial for the stability of the Economic and Monetary Union as a whole. Weakening the corrective arm would be weakening the full body of the EMU,' he said.

On the post-FSAP strategy the ECB has identified at least three important elements:

First, the focus should be on the effective and consistent implementation of the FSAP at the national level. New legislative initiatives at the Community level should be kept to a minimum and only introduced if strictly necessary.

Second, the policies relating to the regulatory and supervisory framework should be complemented by and closely coordinated with other relevant policies for financial services, for instance competition policy.

Third, incentives should be provided for the private sector to play its role in exploiting the opportunities offered by public action.

Moreover, the Eurosystem has requested that a Single Euro Payments Area (SEPA) be created for the euro area from 1 January 2008, meaning that citizens and enterprises could make payments throughout the euro area from a single bank account, using a single set of payment instruments, as easily and safely as in the national context today.

Full speech

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