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Trichet calls for stronger economic governance in Europe

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Trichet calls for stronger economic governance in Europe

Jean-Claude Trichet - Photo EP

(MILAN) - The head of the European Central Bank Jean-Claude Trichet called on Tuesday for stronger economic governance in Europe and paid homage to one of the founding fathers of the euro.

"One of the lessons of the present crisis is precisely... the necessity to not only very strictly apply the governance of the fiscal policy... but to reinforce very significantly this governance and to enlarge it to the surveillance of competitive indicators and macropolicies," Trichet said.

The ECB president was speaking at Bocconi University in Milan at a ceremony in memory of former Italian economics minister and ECB board member Tommaso Padoa Schioppa, considered the intellectual impetus behind the euro, who died in December.

"Tommaso had always been very profoundly convinced that it was necessary to reinforce considerably the E letter in EMU in order for Economic Union to be fully commensurate to Monetary Union. The time to move is now" he said.

"We need, in particular, a stronger role of EU institutions, quasi-automaticity of the surveillance process, quasi-automaticity of sanctions, a much more effective enforcement," he added.

"We need sound economic and fiscal policies to be performed individually by each nation and to be effectively and rigorously controlled by the peers, in each member's very own interest and in the interest of all," Trichet said.

The ECB chief stressed the importance of strengthening governance and budget surveillance several times, warning that EU Commission and Council proposals do not go far enough.

The bank has pointed in particular to a lack of controls and automatic sanctions should countries overspend their budgets.

The former head of the US Federal Reserve, Paul Volcker, also attended the ceremony, as did the former European Commission chief Jacques Delors, and former Italian prime minister and European Commission head Romano Prodi.

Schioppa, who died aged 70, had been a member of the ECB's board of directors from 1998 to 2005 and economics minister under Romano Prodi from 2006 to 2008.

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