(Updates with Stark comments starting in second paragraph.)
Oct. 14 (Bloomberg) -- European Central Bank Executive Board member Juergen Stark called for creating a European Budget Office that may become the “nucleus” of ECB President Jean- Claude Trichet’s proposed euro-area finance ministry.
The independent body could start on an “informal basis,” without requiring a treaty change, Stark said in an interview broadcast on Latvian radio today. The office will be charged with “close monitoring of budget developments” and execution among the bloc’s member states and providing independent advice to policy makers, he said.
“This could be the nucleus of a European finance ministry,” Stark said. “This in the end has to be based on a treaty change, to have the power to interfere in the national budget procedures, otherwise you will never get the fiscal discipline which is required for the smooth functioning of monetary union.”
Europe’s leaders are intensifying efforts to contain the crisis that broke out in Greece almost two years ago and drove up state borrowing costs from Ireland to Italy. Trichet has advocated a “major strengthening” of the monetary union’s fiscal ties earlier this year to help overcome the region’s debt turmoil, proposing a euro-area finance minister to monitor policy making.
“We are now in a situation in which we need more Europe,” Stark said. “More Europe means to transform or to transport national sovereignty to a supranational level.”
--Editors: Paul Abelsky, Brad Cook
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