Aachen, Germany (Reuters) - the 17-nation euro area should consider the creation of a Department of the central finance that it strengthens the coordination of national economic policies to fight the crisis, the head of the Central Bank of the block said Thursday.
Jean-Claude Trichet, who has accepted the Charlemagne, awarded Prize for his contributions to European unity, said that the Department may be created after a long process of transfer of supervision of the national policy of central authorities of the area.
"In this Union of tomorrow or day after tomorrow, it would be too bold, in the economic field, with a single market and a single Central Bank, to consider a Ministry of Finance of the Union?", he said in a speech.
Trichet acknowledged that a central Ministry would require dramatic political changes in the European Union, including a revision of its underlying Treaty. There is little appetite for these changes at the present time in the European Union, where solidarity was tense with requests to the richer States bail out those affected by the debt crisis.
But the speech of Trichet, whose eight-year mandate as President of the ECB will end in October, highlighted frustration in the decision-makers of the EU on the difficulty of managing these crises without being able to impose solutions on indebted governments.
Since last year the European Union and the ECB have put together international rescue of hundreds of billions of euros for the Greece, the Ireland and Portugal, but their success is uncertain, as the three Governments are trying to gather the political will to implement economic reforms and reductions in spending.
Trichet, who led the ECB for a large part of the first decade of its existence, was speaking in the German town of Aix-la-chapelle, where Charlemagne, which has a large part of Europe unified in the middle ages, lived and is buried.
In a speech at Singapore on Thursday, the Germany, who has had to strain to much of the money for the rescue of the euro area, Chancellor Angela Merkel reiterated German demands for a better coordination of European economic policies.
"We want to deepen the coordination of key sectors of economic policy," she said.
STAGES
He said international rescue of the country in exchange for commitments to reform their finances - the model followed for the Greece, the Ireland and Portugal - were reasonable as a first response to the debt crises.
"But if a country is always step deliver, I think that all would agree that the second stage must be different," he said, suggesting that euro-zone authorities receive "a much more deep and authoritative say in the formation of the economic policies of the country." if they deteriorate mislead
The European Union already appears to be implementing this strategy in the case of the Greece, where discussions are underway on a new rescue plan contract which could involve external supervision of Greek privatization program.
"It would be not only possible, but that, in some compulsory case, in the second step for the European authorities - namely the Council on the basis of a proposal by the Commission, in liaison with the ECB - to make themselves the applicable decisions in the economy concerned," Trichet said.
He suggested that European authorities might have the right to veto certain decisions of national economic policy, as the major posts of expenditures of the Government and policies essential for the economic competitiveness of the country.
The Central Finance Department would be created only thereafter - not necessarily "a Department of Finance administers a large federal budget." "But a Ministry of finance which would have direct responsibilities at least three domains."
The Department would monitor fiscal policies and the policies of the competitiveness of Member States; manage issues related to the financial sector in Europe; and represent Europe in the international financial institutions, he declared.
(Reported by Sakari Suoninen; written by Andrew Torchia; editing by Patrick Graham)
