BRUSSELS (AP) ? European Central Bank chief Mario Draghi said the 17 countries that use the euro must unify more closely to avoid a repeat of the debt crisis that's rocked the common euro currency and is threatening the global financial system.
He also hinted that the European Central Bank may play a more pivotal role in the resolution of the crisis, but he insisted that the governments must first back proposals to align their budgetary policies.
"Other elements might follow, but the sequencing matters," Draghi told the European Parliament Thursday. "And it is first and foremost important to get a commonly shared fiscal compact right.
"Confidence works backwards: if there is an anchor in the long term, it is easier to maintain trust in the short term," he added. "After all, investors are themselves often taking decisions with a long time horizon, especially with regard to government bonds."
In his speech, Draghi said a "new fiscal compact" is needed, that would force governments to play by more stringent rules.
"Just as we effectively have a compact that describes the essence of monetary policy ? an independent central bank with a single objective of maintaining price stability ? so a fiscal compact would enshrine the essence of fiscal rules and the government commitments taken so far, and ensure that the latter become fully credible, individually and collectively," he said.
A summit of EU leaders on Dec. 9 is expected to focus on how to make the eurozone more unified.
Draghi also says Wednesday's joint intervention by the world's leading central banks to make dollars more easily available is only a temporary measure.
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