Members of her parliamentary group said after a specially called meeting on the eurozone debt crisis with the German leader late Tuesday that the ECJ could help beef up monitoring of fiscally errant member states’ budgets.
When violations of the deficit or debt ceilings occur, the court could strike down the budget in question and demand a new calculation.
Volker Kauder, leader of Merkel’s conservative Christian Democratic Union (CDU) parliamentary group, said “state bankruptcy proceedings” could start against debt-mired countries from 2013, in a move to tackle national fiscal crises
“with a clear procedure.
“It is now Europe’s duty to ensure that competitiveness can be established and that sound, necessary reforms can be undertaken,” he said.
“The principle that liability and risk are linked must become the order of the day,” he added, calling on financial markets to do their part for stability in the eurozone.
The EU’s stability pact sets an annual national public deficit ceiling of 3.0 percent of gross domestic product and countries are supposed to work towards a balanced budget or even a surplus in times of economic growth.
Total accumulated debt is supposed to be limited to 60 percent of GDP but both limits have been breached by many eurozone states in recent years, culminating in the debt bailouts for Greece, Ireland and Portugal last year and this.
Kauder said after the meeting with CDU deputies, some of whom have grown increasingly critical, that he expected reforms to Europe’s emergency financial rescue fund to pass both houses of parliament as planned by September 23.
The measures, which were decided at an EU summit in Brussels on July 21, include an enlarged role for the European Financial Stability Facility, which will be able to buy government bonds on public markets and provide emergency aid to banks.
The EFSF is also, under certain conditions, to provide credit to eurozone countries, along the lines of the International Monetary Fund, before they are forced to seek emergency financing.