Opinion of the European Central Bank of 3 June 2005 at the request of the Council of the European Union on a proposal for a Council regulation amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (COM(2005) 154 final) (CON/2005/18)
Date: 2005-06-03
Institutions: European Central Bank
Subjects: Community budget, Economic and Monetary Union, European Central Bank, coordination of EMU policies, economic convergence, economic policy, multilateral surveillance

14.6.2005

EN

Official Journal of the European Union

C 144/17

OPINION OF THE EUROPEAN CENTRAL BANK

of 3 June 2005

at the request of the Council of the European Union on a proposal for a Council regulation
amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary posi-
tions and the surveillance and coordination of economic policies (COM(2005) 154 final)

(CON/2005/18)

(2005/C 144/11)

1. On 3 May 2005 the European Central Bank (ECB) received a request from the Council of the European
Union for an opinion on a proposal for a Council regulation amending Regulation (EC) No 1466/97 on
the strengthening of the surveillance of budgetary positions and the surveillance and coordination of
economic policies (hereinafter the ‘proposed regulation’).

2. The proposed regulation is based on Article 99(5) of the Treaty establishing the European Community.
Although this provision does not explicitly envisage consultation of the ECB, the surveillance of
budgetary positions and the surveillance and coordination of economic policies are relevant to the Euro-
pean System of Central Banks' primary objective of maintaining price stability. Therefore, the ECB's
competence to deliver an opinion is based on the first indent of Article 105(4) of the Treaty. In accord-
ance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the
Governing Council has adopted this opinion.

3. Sound fiscal policies are fundamental to the success of economic and monetary union (EMU). They are
prerequisites for macroeconomic stability, growth and cohesion in the euro area. The fiscal framework
enshrined in the Treaty and in the Stability and Growth Pact is a cornerstone of EMU and thus key to
anchoring expectations of fiscal discipline. This rules-based framework, which aims to secure sustainable
public finances while allowing the smoothing of output fluctuations through the operation of automatic
stabilisers, needs to remain clear, simple and enforceable. Compliance with these principles will also
facilitate transparency and equal treatment in the implementation of the framework.

4. The objective of the proposed regulation is to reflect changes in the implementation of the Stability and
Growth Pact that were agreed by the Council (ECOFIN) on 20 March 2005. The proposed regulation
concerns the surveillance process and the setting of medium-term objectives for Member States' fiscal
policies. While the ECB does not see a need to express an opinion on the specific provisions of the
proposed regulation, it endorses the aim of improving the surveillance and coordination of economic
policies so as to achieve and maintain medium-term objectives that ensure the sustainability of public
finances. A rigorous and consistent implementation of the surveillance procedures would be conducive
to prudent fiscal policies.

Done at Frankfurt am Main, 3 June 2005.

The President of the ECB

Jean-Claude TRICHET