European Central Bank Chief Economist Otmar Issing warned policymakers to rigorously apply the revised Stability and Growth Pact, in an advance release of an interview with the Boersen-Zeitung. "The (budget) deficit procedure in the three cases of Germany, France, and Greece is a litmus test for the revised pact," Issing said, according to Friday's release. The Stability and Growth Pact foresees penalties for countries with deficits above 3% of gross domestic product, a deficit target stipulated by the Maastricht Treaty. The pact was revised in March 2005, giving states more discretion in applying excessive deficit penalties. "Violations against the spirit of the pact must come at the highest possible political price," Issing added. One inherent problem with the pact is that "potential sinners" hold judgment over actual sinners, Issing is cited as saying. Further, Issing said politicians should resist the desire to micromanage monetary policy to aid the economy. The past has shown that stop-go monetary policy moves lead to higher inflation and unemployment, Issing said. Issing, who is known as a fierce defender of monetary analysis, also emphasized the importance of monetary aggregates in examining asset prices. "There is no asset price inflation in the history of the world which wasn't accompanied by stronger money supply and/or widening credit demand," Issing said. Issing declined to comment on whether his area of responsibility at the ECB, economics and research, will be split once his term ends May 31, 2006. "This constellation was without alternative, especially in the formative stage," of the ECB, he said. He also wouldn't comment on his future successor. The German government has endorsed Deutsche Bundesbank Vice President Juergen Stark as Issing's possible successor. A decision on Issing's replacement will be made by European heads of state in consultation with the ECB. The interview will be published in the Saturday edition of the Boersen-Zeitung