ECON Committee: Debate with Trichet on the latest developments in the eurozone debt crisis

29 August 2011

Trichet stressed that while a special arrangement for Greece has been launched, the inflexible determination of all other euro area governments to honour their own individual sovereign signature fully is key in returning to stable market conditions.

MEPs quizzed the ECB president with questions related to the debt crisis. Jean-Claude Trichet stressed that the European economic area is growing at a relatively slow pace as a whole. Uncertainly remains particularly high due to an adjustment made by some EU economies. Inflation expiations will be in line with price stability.

Chairwoman, Sharon Bowles, stressed that policymakers should not consider the fragmentation of the euro as an option. “Saving the euro must not cost us the Union”, she remarked.

Trichet presented the following key points:

• Eurozone governments have to implement the 21 July agreement rapidly, which allows for a second bailout.
• During August, Europe has experienced the renewed intensification of the turbulences in financial markets which have created volatility in the EU financial markets. In view of these developments the ECB decided to continue its refinancing operation at least until mid-January 2012. The ECB will meet the demands of banks financing needs.
• The ECB is in full compliance with the Treaty and the ECB has acted independently.
• The ECB resumed government bond market interventions within its Securities Markets Programme (SMP) in August. Via its securities interventions, the ECB Governing Council aims at helping to restore a more appropriate transmission of its monetary policy stance in an environment in which some market segments are dysfunctional. The interventions do not influence the ECB's monetary policy stance. In order to sterilise the impact of these interventions on the liquidity conditions in the banking system, the ECB re-absorbs the liquidity injected.

Werner Langen (DE, EPP) said that despite the criticism of the ECB, the EPP group welcomes the ECB purchase of bonds during August.

Elisa Ferrera (PT, S&D), highlighted that  the EU needs an ECB which is able to go beyond simple price controls which is clearly not enough to solve the problems Europe is facing today. The role of the ECB should be defined in more breadth and depth.

Sylvie Goulard (FR, ALDE) urged the Council to reach an acceptable agreement on the economic governance package. She said that Europe needs to go beyond intergovernmental agreements.

Kay Swinburne (UK, ECR) said that the independence of the ECB is essential. She also noted that the purchase of Italian and Spanish bonds through August was a political decision and that politicians are not always best placed to decide on complicated monetary decisions.

Sven Giegold (DE, Greens) advocated for a true economic union in order to solve the current crisis and future possible crisis.

Burkhald Balz (DE, EPP) said that the euro cannot be successful in the future if there are 27 uncoordinated macro-economics policies. “More Europe is not the problem, it is the solution”, he stated.

Watch video (ECON committee 29 August 2011)

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