Italy's Draghi cites Germany as economic model

15th February 2011, Comments 0 comments

Bank of Italy governor Mario Draghi, seen as a possible candidate to head the European Central Bank, said in an interview Tuesday that Germany was the example for other countries to follow.

"We should all follow the German example," Draghi, who is also a member of the ECB governing council, told the daily Frankfurter Allgemeine Zeitung (FAZ).

"Germany has boosted its competitiveness through structural reforms, that should be the model" he added.

The Italian central bank chief, turning to the highly sensitive issue of eurozone member state public finances, appeared to back a controversial French and German proposal for greater policy coordination and oversight.

"We would need another set of rules, like the Maastricht criteria and the Stability Pact for the budget, to create conditions of growth," he said.

Berlin and Paris are promoting a "pact of competitiveness" that would strengthen eurozone economic governance overall in the 17-nation bloc, especially for peripheral states whose weak public finances pose a serious challenge to the euro project.

"We could, for example, establish rules for pension reforms, with mutual oversight," the German-language newspaper quoted Draghi as saying.

Greece and Ireland last year had to be bailed out by the EU and International Monetary Fund when the markets turned against them and they could no longer raise fresh funds to cover their debt obligations.

Draghi's name is on a short list of possible candidates to succeed Jean-Claude Trichet of France when he steps down as head of the ECB in October.

A key rival, German central bank governor Axel Weber, has told the German government he will step down on April 30, effectively bowing out of the race.

On Monday, Chancellor Angela Merkel's spokesman said: "For the government what is important is that Mr Trichet's successor shares our fundamental German convictions on a stable currency."

As if in response, Draghi stressed in his interview with the FAZ "the significance of stability.

"We must understand that price stability was the foundation of German growth and must become a principle for all of Europe," he said.

© 2011 AFP

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