European Central Bank (ECB) President Jean-Claude Trichet urged policy makers to revitalise the vision of an integrated Europe.
“These days, ‘Europe’ and the benefits it brings have come to be taken for granted,” Trichet said in a speech in Brussels last night, according to a text provided by the ECB. “Thanks to the success of European integration, the threat of war has become a memory of the past for many Europeans, in particular the younger generation. This makes it all the more urgent to develop a renewed vision of the kind of Europe we want and indeed need — a vision that is easily understood and shared among European Union citizens.”
Trichet spoke just hours after police fired tear gas to disperse demonstrators in Athens as Greek lawmakers prepared to vote on austerity measures aimed at averting the euro area’s first sovereign default. Greece’s debt crisis is threatening to undermine the euro, Europe’s common currency now shared by 17 nations.
“Each generation needs to affirm its commitment to Europe,” Trichet said. “Revitalising Europe means” ensuring that “the burdens of today’s adjustments are not shifted onto future generations.” Trichet said the euro has enriched Europe by reducing companies’ transaction and hedging costs, boosting trade and creating over 14 million jobs since its 1999 launch.
The ‘E’ in EMU
He praised the ECB’s record on inflation, saying no other major central bank among euro-area countries had been so successful in the past 50 years.
“The ECB has a clear assignment: to deliver price stability, which is defined as an annual inflation rate below but close to 2 per cent over the medium term,” Trichet said. “And over the 12 years since the launch of the Economic and Monetary Union, the average annual inflation rate in the euro area has been 1.97 per cent. It is the ‘E’ of the EMU where progress is needed.”
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He called on governments to improve economic governance and strengthen rules to prevent unsound policies. “In the short-term, we have to tackle the most urgent issues by implementing the structural adjustment programs that are currently underway,” Trichet said.
For the longer term, he referred to a proposal he made earlier this month for the establishment of a euro-area finance ministry. “Developing these elements in more detail would be the topic of another speech”.