Jean-Claude Trichet is expected to throw down the gauntlet to the eurozone’s political leaders by setting out extensive proposals for preventing future financial crises in the 16-country region. The ECB president is due to speak to the European parliament today, expanding on a document released last week.
The ECB wants to rule out any expulsion from the eurozone, as even admitting the possibility could undermine its stability. Eurozone finance ministers would become “the guardian of fiscal sustainability”, with governments’ tax and spending decisions policed by an independent agency. There would also be more penalties for fiscal miscreants – and a “traffic light” system of intensifying surveillance for countries losing competitiveness.