"I challenge you to get it done", said Mr Rehn, adding that reinforced governance, together with the new financial supervision framework, will lead to "a new era of economic and financial governance and renewed confidence in the EU-economy".
Tackle Eurozone loopholes
Lorenzo Bini Smaghi, of the European Central Bank's the Executive Board, warned that "a crisis can occur again, unless weaknesses are addressed". He expects the Van Rompuy Group to come up with a strong set of proposals by the end of this month. Mr Van Rompuy "has the mandate to tackle the loopholes in the Eurozone. What should be prevented is that problems in one country lead to a problem in the system", said Mr Bini Smaghi, referring to Greece.
The hearing came ahead of the package of legislative proposals to be tabled by the Commission at the end of September. Committee chair Sharon Bowles (ALDE, UK), underlined the importance of the debate for the Committee's own-initiative report on improving economic governance, due in October, which will set out the direction the Parliament wishes to take.
Too little concern for debts
MEPs generally welcomed Mr Rehn's ideas, but had many questions. Rapporteur on economic governance, Diogo Feio (EPP, PT), underlined the need for new legislation to introduce sanctions, but also warned that the attention should not go only to deficits: "There is too little concern for debts", he said. Mr Rehn agreed: "We also want to make the debt criteria real!"
Leonardo Domenici (S&D, IT) suggested establishing a European Debt Agency, to be funded by revenue from a financial transaction tax. Commissioner Rehn did not seem to favour this idea, saying he would first like to see how the European Stability Finance Mechanism will work in practice. Mr Bini Smaghi was also critical: "a transaction tax will not be enough and it might have a distorting effect. If you want to tax, tax profits, not transactions", he said.
Controlling interest rates
Vicky Ford (ECR, UK), asked how anyone can remedy macro-economic imbalances if they no longer control their interest rates. Mr Bini Smaghi replied that "national interest rates can also be controlled by raising capital requirements for banks. And there are other instruments, like taxation policy, regulatory policies or wage policy."
Philippe Lamberts (Greens/EFA, BE) asked what indicators will be used to monitor economic and monetary policies. Commissioner Rehn replied that "we definitely need more than only fiscal indicators. We are thinking of 6 to 8 now, including growth figures, current account balances and unit labour costs."
Elisa Ferreira (S&D, PT) warned that introducing sanctions can be detrimental when not fiscal policy, but labour market or low growth is causing distortions.
Sven Giegold (Greens/EFA, DE) called on the Commission "to act swiftly to widen the economic governance regime", but was wanted to know how 'burden sharing' will look in the event of imbalances: "How will we help indebted countries?", he asked.
EP role in "European Semester" plans
Referring to "European Semester" plans for mutual supervision by Member States of their national spending plans, Commissioner Rehn said he would welcome the Parliament's contribution right at the beginning of the cycle, following the Commission's presentation of the Annual Growth Survey. "We could foresee a Parliamentary Conference, bringing together the European and national parliaments, to discuss challenges and compare perspectives for the coming year", he said, adding that "this could facilitate the emergence of a truly European spirit and democratic dimension in economic policymaking all over the Union, for the benefit of all EU citizens."
Mr Feio's own-initiative report on economic governance, which will ask the Commission to table legislative proposals to regulate governance by law, rather than simply relying on the Member States' resolve, will be put to an Economic Affairs Committee vote on 4 October and a plenary vote is scheduled for the second plenary session in October.
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