(supersedes previous)Bundesbank President Jens Weidmann said Tuesday Italian Economy Minister Pier Carlo Padoan's ideas on sharing eurozone risks are "too optimistic".
Fiscal union would fail to create "strong incentives to respect the rules in the absence of a tough common oversight mechanism," he said in a speech at the German embassy in Rome. Weidmann added he sees "enormous obstacles" to such union and no political will to remove them. "Member States will have to submit to EU fiscal authority...and Italian Premier Matteo Renzi has said...Italy will not be dictated to by Brussels bureaucrats," he said. Weidmann added that the European Commission is always compromising to the detriment of respect for EU rules on balanced budgets. Its tasks, he said, should be handed over to a "European fiscal authority (in order to) solve this problem". "If one fears giving up national sovereignty, strengthening the existing framework remains the only alternative in order to make monetary union more stable," the German central bank chief said.
Italy is among EU members who have been violating the EU Stability and Growth Pact since the single currency was adopted in 1995, Weidmann pointed out.
"Some states including Italy have been breaking the rules more often than they have abided by them, ever since monetary union began," Weidmann said.
"In 2003-2004, Germany also contributed to weakening the binding force of the rules," he added.
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