Lib Dem MEP Sharon Bowles said that any EMF would, like the IMF, need to be accompanied by strong technical management and could form a useful tool for encouraging better discipline within the Eurozone. Controversy rages as to whether or not Greece will seek a loan from the IMF.
ECON Chair Sharon Bowles today commented on German and French plans to establish a European Monetary Fund.
A European Monetary fund is being mooted in the wake of the financial crisis in Greece, which has a public deficit of 12.7 per cent - more than four times Eurozone rules.
While Greek Prime Minister George Papandreou says Greece will not be looking for a bail-out from the EU, controversy rages as to whether or not he will seek a loan from the International Monetary Fund.
Sharon Bowles said:
"In Japan in the mid-1990s there was a similar proposal to establish an Asian Monetary Fund which did not take off. However, countries in Asia did establish a loose pooling of reserves, called the Chiang Mai Initiative.
"As I understand it, a European Monetary Fund has been proposed to lend to countries within the Eurozone, such as Greece, and not countries outside of it, such as the UK.
"In any case, a European Monetary Fund must be accompanied by strong technical management as is the case with the International Monetary Fund. It could also form a useful tool to encourage better discipline within the Eurozone.
"However, it will be no good if the European Monetary Fund is an overly-lite version of the International Monetary Fund."
The ECON Chair will be chairing public hearings on discrepancies in the Greek public accounts over the next weeks.
© Sharon Bowles
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