Bundesbank calls for independent watchdog on EU budgets

(FRANKFURT) - The head of the German central bank, or Bundesbank, called Friday for an independent body to be set up to ensure eurozone countries abide by the bloc's budget rules.

"Given the current role of the EU Commission, there's a lot to be said for transferring its tasks of budget monitoring and rule inspection to an independent authority," Bundesbank president Jens Weidmann wrote in an article for the weekly magazine Focus.

Weidmann accused Brussels of being too lax towards countries that fail to meet their commitments under the European Stability and Growth Pact.

"The rather lax and political application of the rules by the EU Commission is threatening to undermine the (pact's) credibility and binding effects," he argued.

The Bundesbank chief, who sits on the European Central Bank's governing council, warned of a further reallocation of financial risks within the single currency bloc.

"It isn't good in the long run for cooperation between states if each member country can order what it wants but everybody has to pay the bill at the end. In currency union, accountability and supervision must be brought into harmony on a sustainable basis," he said.

Weidmann, who has been publicly critical of the handling of the Greek crisis, said a "central European institution could intervene directly if a member state's economic and fiscal policies" give rise to significant slippages.

It would have a clear and definite mandate and need not be involved in the process of political negotiation, he suggested.

Last month, after the marathon EU summit to save Greece, German Finance Minister Wolfgang Schaeuble had already floated the idea of transferring some of the EU Commission's core tasks to "independent" bodies.