ESTORIL, Portugal (Reuters) - Europe has still not found a solution to its sovereign debt crisis that would restore investor confidence, European Commission President Jose Manuel Barroso said on Friday, advocating greater integration as the way to move forward.
“The truth is, that so far there is no response to the sovereign (debt) crisis that restores confidence to investors,” Barroso told journalists on the fringes of a conference in Portugal. “As long as that does not happen we will have very serious problems and debates in Europe.”
Asked about the role of the European Central Bank, which many economists say has to adopt a role of lender of last resort to resolve the crisis, Barroso said the bank had to remain independent.
“I can say that in the Commission, we always respected the independence of the European Central Bank, it is essential to have an independent central bank which is not subject to political pressure,” he said.
Germany has strongly resisted any suggestions that the central bank act as lender of last resort for indebted countries or carry out so-called ‘quantitative easing’ like the U.S. Federal Reserve and Bank of England have done to support their economies.
“We have confidence that the European Central Bank will carry out its role as it has done so far,” Barroso said.
Barroso defended the Commission’s proposal, launched this week, on the issue of joint euro bonds as one possible solution to the crisis, which has been opposed by Germany.
On Wednesday, the Commission, the EU’s executive arm, proposed intrusive laws to ensure budgets of euro zone countries do not break European Union rules and that their borrowing falls, which, once in place, could lead to joint debt issuance.
German Chancellor Angela Merkel has said it was “extraordinarily inappropriate” for the European Commission to make proposals for joint bond issuance at this stage, but Barroso did not see Germany’s stance as a major problem.
“Germany’s position as far as I know, is that euro bonds can be considered when there is greater integration and discipline in the euro zone, so we are not that far apart,” Barroso said.
“We though it was the time to launch the discussion. We, in the Commission, have the duty to launch and propose ideas and afterwards, obviously, it is up to member states to adopt them or not.”
Merkel said this week that changing the European treaty to pave the way for closer European integration was vital to solving the debt crisis and restoring investor confidence.
Barroso said the Commission was open to the idea of revising European treaties to find a solution to the crisis but any changes should only be carried out in order to deepen integration.
“The European Commission is open to treaty revision if it is to reinforce and to give greater governance and more integration in the euro zone, and not to divide Europe,” he said.
Reporting By Axel Bugge; Editing by Susan Fenton