Prof. Edward Scicluna believes that the European Financial Stability Facility (EFSF) should have the ability to function like a bank and launch eurozone bonds taking the load off the back of the European Central Bank.
Prof. Scicluna stated this when replying to questions by The Sunday Times journalist Kurt Sansone reporting for the paper’s Sunday, October 16, 2011 edition. Kurt Sansone’s report dealt with the European Financial Stability Fund.
In his report Sansone referred to EU Commission President Jose Manuel Barroso’s speech in the European Parliament on Wednesday, October 12, 2011, submitting a road map to save the eurozone from collapse.
Full report by Kurt Sansone regarding Prof. Scicluna’s comments on the subject follows:
Markets will wait anxiously to see what European leaders will come up with but for Labour MEP Edward Scicluna, who is also vice president of the European Parliament’s committee on economic and monetary affairs, academics have long said what the solutions should be.
Prof. Scicluna said the eurozone “needs a minimalist federal fiscal union” which least interferes with the sovereignty of the member states. This means the EU will have the power to introduce taxes.
“This includes some transfer payments between states over and above the current bailouts, a European or eurozone-wide tax, stricter conditionality, stricter collective fiscal surveillance, a more flexible, powerful and independent European monetary fund.”
Prof. Scicluna said the Monetary Fund should have the ability to function like a bank and launch eurozone-backed bonds taking the load off the back of the European Central Bank.
The solutions proposed by academics, he added, stemmed from the realisation that Greece was insolvent and not merely illiquid.
“The best European solutions kept EU political realities in mind, including legal constraints and worked a solution around them but because it was politically unpalatable to the German voter what we have experienced over the past year was a sort of slow striptease of the complete permanent solution,” Prof. Scicluna said.
Even though the EU has moved closer to uncover the final solution, Prof. Scicluna believes there is more way to go until it is executed and much will depend on whether international financial markets are convinced by Germany’s resolve to tag along.
Besides Prof. Scicluna’s comments, the report carried also comments by Finance Minister, Tonio Fenech; and economist Karm Farrugia.