(See EXT4 <GO> for more on the European debt crisis.)
Oct. 19 (Bloomberg) -- European Union President Herman Van Rompuy praised Europe’s top central banker for crisis-fighting flexibility and indicated that richer countries like Germany must make concessions to keep the euro sound.
Van Rompuy hailed Jean-Claude Trichet, nearing the end of his term running the European Central Bank, for daring to use unorthodox policies to rescue the 17-nation currency union.
“What he did was necessary to save the euro as such,” Van Rompuy said at Trichet’s retirement sendoff in Frankfurt today.
Four days before a euro crisis summit, Van Rompuy said a better-managed euro region will require sacrifices by all countries, not only by poorer ones like Greece that are struggling with oversized debts.
Europe needs more fiscal discipline and integration “not just to punish the sinners, but to link our policies,” Van Rompuy said. “That implies a loss of sovereignty for everyone, not only for countries in trouble.”
Van Rompuy also questioned the euro area’s “dangerous” need for unanimity on key decisions, without outlining alternatives.
Speaking in the heartland of central bank independence, the EU president hailed Trichet for an undogmatic grasp of the ECB’s rights and duties. He said the French central banker virtually took on the above-the-fray role of a constitutional monarch.
“Independence doesn’t mean detachment from political decision-making,” Van Rompuy said. Trichet “perfectly understood this aspect of a central banker’s role, in the grand tradition of the French civil service.”
While calling for “unconventional measures that break the mold of economics textbooks,” Van Rompuy gave no indication how the Oct. 23 summit will address Greece, the euro rescue fund or support for banks.
Trichet, 68, leaves the ECB Oct. 31 after an eight-year term. He will be succeeded by Bank of Italy Governor Mario Draghi, 64.
--Editors: Leon Mangasarian, Eddie Buckle.
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