MEPs say that to solve the root problem and to prevent future crises, individual EU Member States need to improve their fiscal and structural policies and the EU as a whole needs an "economic governance framework".
Anti-debt crisis measures need to be supplemented by stronger economic co-ordination at EU level, with Parliament having the same powers as the Council of Ministers, says a resolution, voted by the Economic and Monetary Affairs Committee on Monday, on the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism.
Whilst welcoming emergency measures taken by the Council of Ministers early in May, MEPs regret that European policymakers "did not take decisive action earlier, despite the ongoing deepening of the financial crisis" and say that the actions taken are "merely of temporary nature".
Lasting solution needs more solidarity
To solve the root problem and to prevent future crises, individual EU Member States need to improve their fiscal and structural policies and the EU as a whole needs an "economic governance framework", claim MEPs. This framework should include a "permanent EU sovereign debt crisis resolution mechanism", such as European Monetary Fund, "a co-ordinated approach to macroeconomic rebalancing", and "enhanced synergies between the EU budget and Member States' budgets", in order to supplement sustainable fiscal consolidation, says the resolution.
When Member States develop their economic policies, they should take account not only of possible effects at national level, but also of those for the EU and in particular the EMU Member States, say MEPs.
The long-term strategy should also tackle "competiveness gaps" among EU Member States, which at the moment cause internal macroeconomic imbalances both within the Euro area across the EU as a whole, they add.
Study in depth before setting up
MEPs ask for more information about the European Financial Stability Facility (EFSF) and how it will co-operate with the International Monetary Fund (IMF). Among other things, they want to know whether interest rates will be co-ordinated and whether there are any measures to ensure that these two institutions are treated equally.
The committee asks the Commission to carry out a series of studies on the potential fiscal effects of the EFSM and the effects of the EFSF on bond markets, as well as the value of introducing innovative financing instruments such as the joint issuance of euro bonds. It also asks for an analysis of the options for a long-term system to deal with sovereign debt problems.
Involve Parliament to boost budgetary credibility
MEPs ask to be more extensively involved in the process of setting up similar systems in future. Since Parliament and the Council decide the EU budget together and on equal footing, it is crucial to involve MEPs at an early stage. When deciding on new measures, a legal basis that secures Parliament's co-decision powers should be chosen, says the resolution.
Last week, the committee tabled an oral question to the Commission about the European Financial Stabilisation Mechanism and the European Financial Stability Facility. In this question, MEPs ask the Commission how it intends to ensure that Parliament is involved in all these new procedures. They also ask what effects the EFSM will have on the EU's annual budget and long-term budgeting framework.
The resolution is to be put to vote by the full Parliament at next week's Strasbourg session (5-8 July), where MEPs will also put the oral question to the Commission.
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