Published October 20, 2012
BERLIN – European Central Bank policymaker Klaas Knot has thrown his support behind German finance minister Wolfgang Schaeuble's call for a euro zone commissioner with power over European Union nations' budgets.
The EU needs not only stricter budget discipline but also stronger debt controls, Knot, who heads the Dutch Central Bank, told German newspaper Welt am Sonntag in an interview published on Sunday.
"I welcome the idea ... if we can manage to keep a better eye on these aims it would represent huge progress. It is worth thinking about Wolfgang Schaeuble's idea carefully."
Asked about ECB plans to buy the bonds of troubled euro zone states and whether this risked easing the pressure on governments to implement reforms, Knot said the bank had learned lessons from its last bond-buying program.
"We are prepared to play the fire brigade in the short term, but only when we are convinced that the new house will be constructed more solidly," he said.
Spain was expected to request EU aid in the next few weeks, which would trigger ECB bond buying. Prime Minister Mariano Rajoy said after an EU summit in Brussels on Friday, a decision on whether to ask for aid had not been made.
Asked about the possible time frame within which Italy and Spain would need to be able to stand on their own feet after any ECB bond buying, Knot said: "That is very difficult to say.
"Depending on how much restructuring a country must do it can take between three and five years for reforms to take their full effect. But this does not mean that the states would need help for the same period. Once investors see things moving in the right direction then a state can return to financial markets earlier, or may not even lose access at all."
Schaeuble said five days ago a new "currency commissioner" could have the power to reject national budgets not in line with the euro zone's strict fiscal rules.
The model for the position would be the EU's competition commissioner who, Schaeuble said, was "feared in the whole world".
However, a previous proposal from Schaeuble for a "Sparkommissar", or savings commissioner, was quietly dropped after it stirred fury in Greece and got a cool reception from Germany's other EU partners.
(Reporting by Alexandra Hudson; Editing by Dan Lalor)