European Central Bank urges urgent action on Greece

The head of the European Central Bank Jean-Claude Trichet called on Monday for urgent application of the latest debt rescue measures for Greece, and spoke of "confederal" management of eurozone finances. Trichet also said it was "absolutely imperative" to tighten up the monitoring of economies in the eurozone, in a speech against a background of renewed concern over the Greek and wider eurozone debt crisis. Trichet said that eventually "one can imagine a confederal government with a confederal finance minister who would be able to underwrite overall governance at the heart of the eurozone and impose decisions." The ECB head said that there was "no longer a shadow of ambiguity" about the fact that the crisis had "clearly revealed that governance within the eurozone was absolutely essential." The crisis was resulting in the emergence of "a consensus for an extremely substantial strengthening of the Stability and Growth Pact." Trichet said that EU and national legislatures enacting much tighter monitoring of national budgets, and which were due to be adopted within "a few days", were "clearly absolutely imperative." He said that "in coming days we shall have a new pillar of surveillance of macro-economic policies, of indicators of competitiveness and of imbalances within the eurozone." He also said it was urgent to apply the EU decisions taken on July 21 to provide Greece with a second debt rescue. "There also we have an immediate and imperative need for all of the decisions to be enacted," he told the Institut Montaigne. Trichet spoke against a background of sharply renewed concern about the state of Greek finances and the wider eurozone debt crisis. On Friday an audit mission from the EU, ECB and International Monetary Fund cut short its latest study of Greek finances, on which depends the next release of money from the first rescue, saying that Greece had more work to do on its crash programme to reduce the public deficit.