The European Parliament is calling for the creation of an EU monetary fund to replace the "undemocratic" troika of international lenders.

In a non-binding report voted Thursday (13 March) in Strasbourg, MEPs set out the creation of a European Monetary Fund as a "long-term goal" that will require a change of the EU treaties.

Student or retired? Then this plan is for you.

They argue this is needed because the 'troika' of lenders (European Commission, European Central Bank and International Monetary Fund) was an "ad-hoc" set-up with no clear legal basis and with no democratic scrutiny from the European Parliament.

In addition to the internal divergences and finger-pointing within the troika, an extra layer of unaccountability was added by the Eurogroup of finance ministers - also an informal formation with no legal basis - who were the main decision-makers on the size of the bailouts and the austerity programmes attached.

"The troika is a bit like the Three Musketeers - they were four. The Eurogroup is the fourth and main decision-maker," said French MEP Sylvie Goulard on Wednesday during a debate about the troika.

Her colleague Liem Huang Ngoc, who co-authored the parliament's report, also noted that it was the Eurogroup, "where Germany's voice held sway," which took all the big decisions.

The report "calls on the Eurogroup, the Council and the European Council to assume full responsibility for the operations of the troika.” It asks for the head of the Eurogroup to be heard before the European Parliament and the national parliaments concerned before a country is granted financial assistance.

They also call for a "transparent evaluation of the awarding of contracts to external consultants, the lack of public tenders, the very high fees paid and the potential conflicts of interests."

EUobserver last year reported that a handful of big consultancy and audit firms were hired on secretive multi-million contracts in connection with the troika, often without public tenders and regardless of their potential conflicts of interests.

Social adjustments

MEPs want the EU commission to review its activities within the troika and to present a report by the end of 2015 on the "economic and social consequences of the adjustment programmes" in Greece, Portugal, Ireland and Cyprus.

The report calls for new debt restructuring for Greece and a fairer debt deal for Ireland, who at the time it bailed out its banks was not allowed to make bondholders pay - a principle that has since been scrapped.

The report "considers that too little attention has been paid to alleviating the negative economic and social impact of adjustment strategies in the programme countries."

MEPs say they are "alarmed" after hearing from ex-Eurogroup chief Jean-Claude Juncker - now a candidate for the EU commission top post - that the Eurogroup "endorsed the recommendations of the troika without extensive consideration of their specific policy implications."

"This admission sheds a worrying light on the blurred scope of the 'technical advising' and 'Eurogroup agency' roles devolved to both the Commission and the ECB in the framework of the design, implementation and assessment of assistance programmes," MEPs said.

Alejandro Cercas, a Spanish MEP who looked at the social impact of the troika and drafted a parallel report, said the troika "destroyed" in a few months what decades of labour bargaining had achieved.

"We need to change the economic dogma of the troika - looking only at the impact on markets. The economy should serve the people, not the other way around," he said.