September 12, 2004

Bundesbank attacks Brussels' euro reform plans

The Bundesbank speaks out against the possible weakening of the stability pact:

Commission proposals to reform the rules underpinning the euro today received heavy criticism from Germany's Central Bank, the Bundesbank.

"The Bundesbank is of the opinion that the proposed changes will not strengthen but weaken the stability pact", said the Bank, referring to the euro rules.

The Bank expressed its concern that budgetary discipline would be undermined.

"[The plans] will reduce the incentive for euro zone countries to pursue solid budget policies and, at the same time, send a wrong signal to those countries that have not yet adopted the single currency", continued the statement.

And the Bundesbank added that the long-awaited proposals - unveiled last Friday (3 September) - would "make the rules more complicated and complex, thereby impairing its ability to be implemented".