UPDATE 1-ECB’s Wellink: Euro plan not enough without debt cuts

* Southern European countries need to lower deficits quickly

* Fines to be handed out quicker when euro zone rules broken

* Euro rescue ‘one and only imaginable approach’

(Adds Wellink comments)

AMSTERDAM, May 11 (BestGrowthStock) – The European Union’s $1
trillion rescue package is not enough to save the euro zone
structurally, European Central Bank governing council member
Nout Wellink said in Dutch newspaper NRC Handelsblad on Tuesday.

Countries such as Greece, Spain and Portugal need to put
their budgets in order quickly to prevent the crisis from
escalating, Wellink was reported as saying in a story on the
daily’s Web site.

“That problem needs to be solved, the safety net has a
temporary nature,” Wellink was quoted as saying, adding that it
was the “one and only imaginable approach” to protecting the
euro zone.

The rules of the euro zone’s Growth and Stability Pact,
which defines what size of deficits and debt a country can have,
need to be enforced more strictly, Wellink said.

“Fines need to be handed out quicker if countries break the
rules,” Wellink was quoted as saying.

Wellink also said countries which break the rules should be
blocked from accessing European Union funds for infrastructure
projects.

A spokesman for the Dutch central bank (DNB), where Wellink
serves as president, confirmed his quotes were accurate.

Restructuring Greece’s debt would not have been a solution
to the country’s debt problems, Wellink said.

“That would have been an enormous blunder, no matter how
difficult the current solution is for the Greeks, a
restructuring of sovereign debt would have increased the
contagion risk much further because you had created expectations
this would happen to other countries as well,” he said.
Investment Research

(Reporting by Gilbert Kreijger and Ben Berkowitz; Editing by
Mike Peacock)

UPDATE 1-ECB’s Wellink: Euro plan not enough without debt cuts