BRUSSELS The European Commission proposed on Wednesday new, intrusive laws to make sure budgets of euro zone countries do not break EU rules and that their borrowing falls, which could lead to joint debt issuance in the future.
The Commission, the executive arm of the 27-member European Union, presented a draft regulation which would allow it to review draft budgets of euro zone countries by mid-October and ask for revisions if they were not in line with EU budget rules.
The budget drafts of euro zone countries would have to be based on independent forecasts.
The second regulation would create a legal basis for heavy surveillance of policies of a country either already getting emergency financial aid from the euro zone or facing serious financial instability.
"To return to growth, member states need to raise their game when it comes to implementing their commitments to structural reforms, as well as embrace deeper integration for the euro area," Commission President Jose Manuel Barroso said.
"The goals driving this package -- economic growth, financial stability, budgetary discipline -- are linked to each other. We need all of them if we are to move beyond the current emergency towards a Europe in which solidarity is balanced by strengthened responsibility," Barroso said.
Once the tighter oversight and control of euro zone national fiscal policy is in place, the 17 countries now sharing the euro could jointly borrow from the market through "stability bonds."
The Commission outlined three main options for such joint debt issuance without making any recommendations on which might be best.
"The Commission makes clear that any move towards introducing stability bonds would only be feasible and desirable if there were a simultaneous strengthening of budgetary discipline," it said in a statement.
(Reporting by Luke Baker and Jan Strupczewski; editing by Rex Merrifield)