PARIS – European Central Bank President Jean-Claude Trichet says Europe needs “the equivalent of a budgetary federation” as a watchdog over eurozone governments’ public finances in response to the continent’s government debt crisis.

In an interview published Monday in the French daily Le Monde, Trichet said that existing European treaties would permit the kind of “control and surveillance” of government’s public finances.

Trichet suggested new institutional arrangements would not be needed “at first,” meaning the basic EU treaties would not have to be changed — a long and politically difficult process.

Existing EU rules have not been enough to get countries to coordinate their fiscal management and keep them from running up too much debt.

In the interview, Trichet said he supports European Union plans for EU oversight to go further and monitor how EU economies are performing.

Last month, European Union officials urged a crackdown on widespread government overspending, calling for much closer economic coordination between EU nations to curb the acute debt crisis that started in Greece and has threatened to sink the shared euro currency.

The plan presented by the EU’s executive commission advocated unprecedented scrutiny of countries’ spending plans even before they go to their national parliaments, and new financial penalties for rulebreakers.


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