Central bank governor Visco maps road to credible Europe

Economic, banking, fiscal union needed

Central bank governor Visco maps road to credible Europe

(ANSA) – Rome, September 13 - Bank of Italy Governor Ignazio Visco on Thursday set out the steps needed to build a credible Europe. The first is an economic union "that really works", he told students at a conference on economics and politics at Rome's Third University. Then there is the creation of a banking union and finally of a fiscal union, "namely a union of budget policies", he said. The Italian central bank governor said he thought the much-awaited European Stability Mechanism for highly indebted eurozone countries alone was insufficient to tackle the current economic crisis. In regards to the possible imposition of enhanced conditions by the European Central Bank on struggling economies in exchange for buying sovereign debt, he said "conditions should be linked not to measures but rather to a process heading in a particular direction" involving closer monitoring of the country concerned. He added that it would be "undesirable" for the ECB to serve as a substitute for political decisions, explaining that it is the responsibility of political leaders to forestall the risks associated with bond spreads, an indicator of investor confidence in countries' ability to weather the economic storm. "I understand that over time the central banks have been asked to intervene," he said. "The tendency to bring monetary and financial stability together is positive. To go any further can be dangerous".

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