Trichet says ECB did `all it could`
Baku, October 15 (AZERTAC). European Central Bank chief Jean-Claude Trichet, pictured on October 6, said the bank had done its part in the eurozone debt crisis and now it was up to governments to act, in an interview with the Financial Times published Thursday.
AFP - European Central Bank chief Jean-Claude Trichet said the bank had done its part in the eurozone debt crisis and now it was up to governments to act, in an interview with the Financial Times published Thursday.
"I think that the ECB has done all it could to be up to its responsibilities in exceptional circumstances," Trichet told the newspaper, which stressed the Frenchman made clear the ECB will not be the lender of last resort for governments.
"The ultimate backstop is, of course, the governments. To do anything that would let governments off their responsibilities would be a recipe for failure," he said in the interview published on the British newspaper`s website.
The comments from Trichet, who is retiring at the end of October after eight years at the helm of the ECB, came ahead of a meeting of Group of 20 finance chiefs in Paris.
Trichet will join finance ministers and central bankers from the world`s major economies Friday and Saturday in the French capital.
At a pre-G20 briefing, a French official said Thursday the top priority would be to tackle the eurozone financial crisis.
"The G20 is taking place in a context where the absolute priority is to find solutions to stabilize the eurozone," said the official, speaking on condition of anonymity.
France holds the rotating presidency of the G20. The French official said that measures proposed at the weekend will be brought to the G20 summit in Cannes in the first week of November.
For 30 years, whenever economic crises hit the world, Jean-Claude Trichet was at the centre of action. As his career draws to a close - his eight-year term as European Central Bank president ends in three weeks - the former French finance official and Banque de France governor is in the midst of his biggest crisis yet. “It is a historical event of the first magnitude, the worst crisis since the second world war,” he exclaims. “It could have produced a great depression had appropriate decisions not been taken at the appropriate time.”
At its epicentre is Europe`s 17-country eurozone. The bloc`s leaders are scrambling to assemble a rescue package that will finally restore the stability of Europe`s 13-year old monetary union. In an interview with the Financial Times, however, Mr Trichet sees the crisis as broader - as a crisis of the west. “All advanced economies are being x-rayed by the present crisis and revealing their skeletons and the weaknesses in their skeletons. It`s true for all of us - for Japan, for the US, for Europeans.”
I think the governing council of the ECB has demonstrated a capacity to be lucid in diagnosing the gravity of the situation since the start of the crisis in August 2007. So I would certainly echo what you say.
We have had two categories of monetary policy measures in this crisis. One has been the decisions on interest rates - what I would call the standard measures - which are designed to deliver price stability over the medium term and be sure that inflation expectations are solidly anchored.
On the other hand, in periods of abnormal tensions in financial markets, we have helped restored a better transmission of our monetary policy - of our interest rates - by other, non-standard measures.
The most important of our non-standard measures is full allotment at fixed rates, which we used as early as August 2007 and which is now a generalised concept. Other non-standard measures have included intervention in the covered bond market and in treasuries.
After almost 13 years of the euro we have delivered for 332 million fellow citizens 2.0 per cent average annual inflation. This is better than over the past 50 years for the main euro area countries, and we can see from information we extract from financial markets that we are credible to deliver price stability for the next 10 years, in line with our definition.
So this is a level of credibility, after four years of crisis, which demonstrates the effectiveness of our so-called separation principle between the standard measures and the non-standard measures.
As it is obvious, the euro as a currency is credible and solid. The challenges in the euro area are related to fiscal credibility and financial stability.
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