European Central Bank Executive Board member Juergen Stark said he considered it necessary to establish a European budget office as part of the euro zone Finance Ministry, the establishment of which was first proposed by ECB President Jean- Claude Trichet.
The budget office may become the nucleus of a European Finance Ministry. Ultimately this would have to be based on a treaty change within the European Union in order to provide the office with the power to interfere in national budget management. Otherwise the European Union may never have the fiscal discipline necessary to secure uninterrupted functioning of the monetary union, Stark said in an interview to a Latvian radio station.
Stark also said the agency could be launched on an informal basis, while amendments to the EU legislation can be made later.
Trichet offered to establish a united finance ministry in June 2011. He emphasized that such a measure would help deter the region’s debt turmoil.
Currently, the EU states can manage their finances individually. Such a model, as the examples of Portugal, Ireland and Greece, show this is not always efficient. The Greek government failed to drive the country out of the debt crisis despite external financial support, which did not help Greece to cut the budget deficit, avert investment outflow and get back access to the foreign loan market.