THE European Central Bank president Jean-Claude Trichet is today expected to set out strict proposals to stop further financial crisis in the Eurozone.
The ECB’s first plan is to rule out expulsions from the 16-country group, to stop market jitters.
Under Trichet’s proposals, Eurozone finance ministers would become “guardians of fiscal sustainability”, with an independent agency policing governments’ tax and spending decisions. According to an ECB paper released last week, sanctions for countries flouting fiscal rules could include cuts in EU aid, suspended voting rights or policing by outside experts.
The ECB document also suggested setting up a crisis management institution which could rapidly buy Eurozone government bonds to “quickly address disruptions in sovereign bond markets”.
City A.M. Reporter