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Chair of ECON Sharon Bowles comments on proposed European Monetary Fund

March 8, 2010 1:00 PM

Lib Dem MEP Sharon Bowles, who chairs the European Parliament's powerful Economic and Monetary Affairs Committee (ECON), has commented today on German and French plans to establish a European Monetary Fund.

A European Monetary fund is being mooted in the wake of the financial crisis in Greece, which has a public deficit of 12.7% - more than four times Eurozone rules.

While Greek Prime Minister, George Papandreou, has said that Greece will not be looking for a bail out from the EU, controversy rages as to whether or not he will seek a loan from the International Monetary Fund.

Sharon Bowles said:

"In Japan in the mid-1990s there was a similar proposal to establish an Asian Monetary Fund which did not take off. However, countries in Asia did establish a loose pooling of reserves, called the Chiang Mai Initiative.

"As I understand it, a European Monetary Fund has been proposed to lend to countries within the Eurozone, such as Greece, and not countries outside of it, such as the UK.

"In any case, a European Monetary Fund must be accompanied by strong technical management as is the case with the International Monetary Fund. It could also form a useful tool to encourage better discipline within the Eurozone.

"However, it will be no good if the European Monetary Fund is an overly-lite version of the International Monetary Fund."

Sharon will be chairing public hearings on discrepancies in the Greek public accounts over the next weeks.