European Central Bank President Jean-Claude Trichet on Thursday suggested setting up of a finance ministry for the euro area.

"Would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the Union?" Trichet said in a speech at a ceremony to receive the International Charlemagne Prize, awarded by the city of Aachen.

The finance ministry would not necessarily administer a large federal budget, but it would exert direct responsibilities in at least three areas, the central bank chief said.

First, it would monitor both fiscal and competitiveness policies of member states and take direct responsibilities for members in fiscal distress. Secondly, it would take all the typical responsibilities of the executive branches as regards the union's integrated financial sector, he suggested. Finally, it would represent the union in international financial institutions.

European authorities should be entrusted with the right to veto some national economic policy decisions, Trichet added. A veto could apply to major fiscal spending items and elements essential for the competitiveness of the nation.

RTTNews