Recent reforms of euro zone governance have not gone far enough, European Central Bank Governing Council member Yves Mersch said on Tuesday.
The recent European proposals for reform of the economic governance of the euro area go in the right direction, but are not ambitious enough to ensure a healthy and efficient functioning of monetary union, Mersch said in a statement.
Firstly, excessive deficit procedures should have a faster trigger, with sanctions applied early and quasi-automatically, he said. Secondly, greater emphasis should be put on national debt levels, he added.
The sovereign debt crisis had its roots in the fact that euro zone countries were unable to properly monitor each others' economic policy, and procedures should be put in place to correct that, Mersch added.
Beyond these new mechanisms, whose activation should also occur only in exceptional circumstances and under strict compliance, it is crucial that states should learn from this crisis by intensifying their efforts to consolidate, Mersch said in a new year statement as president of Luxembourg's central bank.
(Reporting by Robert-Jan Bartunek and Pete Harrison)