EU economic reform plan too timid: ECB

(FRANKFURT) - The European Central Bank Tuesday criticised proposed European Union economic reforms as too timid and said that countries breaking debt rules should be punished quickly and automatically.

"For the euro area, a more ambitious governance structure must be foreseen, to ensure the smooth functioning of economic and monetary union," the ECB said regarding the European Commission's proposed economic reforms.

The European Union's executive body has laid out a project aimed at warding off the kind of debt crisis now faced by Greece and Ireland, and EU leaders are expected to approve at least some of the measures at a summit in late March.

But the ECB and others are concerned that political considerations will result in diluted reforms and the central bank called for bolder moves, including changes to EU treaties at some point in the future.

Its 10-point plan urges that surveillance of eurozone member budgets be subjected to "greater automaticity", making it harder for countries where economic reforms are needed to escape sanctions.

"When member states do not comply with recommendations to adjust their policies, this should lead to the consequences foreseen in the preventive and corrective procedures," the ECB stressed.

It added that "strict deadlines to avoid lengthy procedures and deleting 'escape clauses'" would also reduce wiggle room for governments that failed to get their finances in order.

And a new macroeconomic surveillance framework should "have a clear focus on euro area countries with large current account deficits, significant competitiveness losses and high levels of public and private debt," the bank said.

It also called for the "introduction of political and reputational measures fostering early compliance with the surveillance framework," though the effectiveness of so-called name and shame measures has been questioned in the past.