EU fiscal treaty 'vital for ECB'

The main purpose of the fiscal compact treaty was to provide cover for the European Central Bank to engage in quantitative easing, an Oireachtas sub-committee heard today.

Sharon Bowles, Liberal Democrat chair of the European parliament's economics committee told the Sub-Committee on the Referendum on the Fiscal Stability Treaty, this morning that the treaty was vital for the ECB.

She said there was "multiple summitry" going on and the ECB was "just about the only institution that had substantial credibility in trying to solve this problem".

She said finance ministers were meeting and agreeing something and then having to meet again a few weeks later.

"Retaining the credibility of the ECB was of absolute paramount concern and therefore of itself provides a very good reason to have this agreement, even it is a little bit thin," she said.

Lord (Lyndon) Harrison, Labour party chair of the House of Lords sub-committee on economic and financial affairs and international trade, said "bringing the fiscal compact treaty within the EU treaty architecture would offer benefits for all member states including the UK".

Lord Harrison said he believed the UK would one day go "knocking on the door" to join the euro.

There committee heard yesterday there probably would have been no sovereign debt crisis if all EU countries consolidated their finances during the “good times”.

Danish ambassador Niels Pultz said his government believed the fiscal treaty was a necessary instrument in the EU’s “common toolbox” and “should be seen as an important part of the EU’s wider efforts to combat the debt crisis”.

Addressing the first meeting of the committee he said: “If all European countries had conducted sound and sustainable economic and fiscal policies in accordance with the fiscal compact, Europe would most likely not have experienced the sovereign debt crisis.”

Mr Pultz was among four EU ambassadors addressing the sub-committee chaired by Meath East Labour TD Dominic Hannigan yesterday.

This afternoon, the committee  heard from Irish Times economics editor Dan O'Brien, TCD professor Philip Lane and Friends First economist Jim Power.

Taoiseach Enda Kenny, Tánaiste Eamon Gilmore and other party leaders are also to appear before the committee.

In addition, Fianna Fáil leader Micheál Martin, Sinn Féin’s Gerry Adams and chief whip of the Technical Group Catherine Murphy TD will address an all-day committee meeting on Tuesday, April 17th.

Each of them will be given an hour to present their views and answer questions on their stance on the May 31st referendum. Senator Katherine Zappone will represent Independent members of the Seanad.

The subcommittee is to issue a report of its findings by May 5th.