HIGHLIGHTS-EU economy chief-designate Rehn in parliament

BRUSSELS Mon Jan 11, 2010 6:25pm GMT

BRUSSELS Jan 11 (Reuters) - The following are comments by Olli Rehn, European Union economic and monetary affairs commissioner-designate, during an approval hearing in the European Parliament on Monday.

ON GREECE SPILLOVER

"The problem in Greece concerning the excessive deficit and the rapidly rising public debt is a very serious one, especially for Greece, Greek citizens and taxpayers. Of course, it also has potential spillover effects for the whole euro zone.

"It is not so serious yet that it would threaten stability of the euro zone and therefore it is absolutely essential that the Greek government and parliament take rapid action to create a convincing economic policy package."

ON BRITAIN, GREECE

"It is very important that the UK government pursues these objectives (budget deficit cuts) with determination.

"I want to work with Greece and the Greek government ... but still the main responsibility is in the hands of the Greek government and parliament to ensure that the excessive deficit will be brought to a sustainable course.

"It will be a major political and economic challenge for the Greek government and the whole society."

ON FOREX

"In my view the exchange rate of the euro in relation to the dollar and thus to the renminbi (yuan) ... is a potential risk for European recovery and therefore we have to continue to discuss with the Chinese on this matter."

ON MORAL HAZARD

"In my view the Stability and Growth Pact ... must by definition ensure that members of the euro zone have sustainable public finances ... so there is no need for a permanent crisis mechanism.

"(Such a) mechanism ... would involve a major risk of moral hazard."

ON GREEK ECONOMIC DATA

"The Greek administration has started taking measures, and the (European) Commission and Eurostat (the EU statistical agency) support Greece in the measures they are taking.

"We will have to consider the Commission being given those auditing powers so we can make sure the data from member states is correct and trustworthy."

ON ESTONIA

"Membership in the euro zone should not cause a rise in prices.

"The next likely candidate should be Estonia, it should be able to enter the euro zone.

"Estonia is rather close, but we will have to ensure that all the rules are respected, that the (EU) treaty is respected, and we will return to this matter in the coming spring."

"The next likely candidate is Estonia. Public finances are in pretty good shape."

ON EURO ENLARGEMENT

"For me, it is clear that the fundamental objective is sustainable public finances ... and macroeconomic stability. Convergence criteria are proxies for indicators that measure whether the country meets the criteria for sustainable public finances."

ON IMBALANCES

"China is a surplus economy which is not willing to let its currency appreciate, while the United States has long been a deficit economy, with a very high current account deficit.

"In this context we have to pursue a serious discussion with our main partners, especially the United States and also China, on how we can return to better global balances.

"In this sense, China is at least as important as the United States."

ON INFRASTRUCTURE BONDS

"As regards financing of the infrastructure of communication networks, energy networks ... on a European basis, I think that merits a fresh look (the idea of pan-EU bonds) and I have an open mind as regards this kind of project financing together with, for instance, the European Investment Bank."

ON COORDINATION

"We have to coordinate our actions better. This will be one of the main tasks of the new (European) Commission."

ON FISCAL CONSOLIDATION

"The exit strategies are so important in the sense that we have to get them right. They need to be well coordinated, not one size fits all, but taking into account country-specific situations.

"Fiscal consolidation needs to start in 2011 at the latest, in some countries earlier."

ON GREECE

Asked whether he thought Greece might leave the euro zone:

"No, I don't.

"The Greek government is aware of the seriousness of its situation. The (European) Commission is assessing the matter with major concern.

"Now it is essential that the Greek government shortly, in the next couple of weeks if not days, present a comprehensive policy package ... concrete, tangible measures on how to reduce the excessive deficit."

ON SINGLE REPRESENTATION FOR EUROPE

"Currently we punch below our weight.

"By standing united we can lead, not follow.

"We have to have a single representative for Europe in the area of world economic governance."

ON EURO ENLARGEMENT

"Economic stability in Europe can also be reinforced through a gradual enlargement of the euro area, for which I will work on the basis of existing rules, ensuring equal treatment."

ON FISCAL PACKAGES

"Fiscal stimulus packages ... need to be withdrawn when the time is right.

"We have to strengthen coordination of economic policies, coordinate stimulus measures and exit strategies.

"We have to restabilise public finances over the next few years, this will require rigour."