MNI INTERVIEW: Lagarde's ECB A Communication Boost: ECON Chair

By Silvia Marchetti

     ROME(MNI) - Christine Lagarde's arrival at the helm of the European Central

Bank should help improve communication with the European Parliament, potentially

enabling it to better make the case for government spending to support monetary

policy, Irene Tinagli, chairwoman of the parliament's Economic and Monetary

Affairs Committee (ECON) told MNI.

     "I hope, and am confident, that Lagarde will continue along such a path,

and, of course, besides the monetary dialogue an important role will be played

by the communication strategies that the ECB itself will adopt," Tinagli said in

an interview.

     The new ECB president, who will preside over her first Governing Council

meeting on Thursday, has also promised to keep ECON informed of the central

bank's upcoming review of its monetary policy, which will involve assessing the

performance of its different tools and permit consideration of whether some

might be modified, she said.

     "Pursuing an enhanced monetary dialogue and a constant communication

exchange with the ECB is paramount to fully grasp the impact of key monetary

policies, particularly now that a policy review will be launched by the ECB."

     Tinagli, a member of Italy's co-ruling Democrat Party, said that the

European Union had to push ahead with proposed reforms including an overhaul of

the eurozone's bailout fund, the European Stability Mechanism. Approval of the

revamped ESM has been pushed back following calls by Italy, facing tensions

within its governing coalition, for changes to clauses on debt-restructuring to

take account of different types of bonds.

     "If a clearer, more openly stated sub-aggregation of public debt is what

Italy asks to exit the stalemate, that's fine, but negotiations can't be

constantly overturned" whenever there's a shift in the parties supporting the

governing majority, Tinagli said.

     "We need to move forward with the ESM and the banking union so to

consolidate a stronger, more resilient financial architecture of the eurozone

able to better weather the resurface of any future crises."

     The ECON chairwoman said she supported the creation of a eurozone-wide debt

instrument, a proposal with strong Italian backing.

     "It's an important step forward that discussion over a EU-wide safe asset

is launched. Even though it remains a very delicate and thorny political issue,

it is crucial to make progress on this now that Europe is far from a recession,

rather than tackle it when hard times strike."

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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