European Central Bank President, Jean Claude Trichet, sat down with FOX Business Network’s Liz Claman to talk about Greece’s debt crisis, European inflation, the Euro vs. Dollar, and a proposed EMF.
Excerpts from the interview below: Courtesy of FOX Business Network
On whether the Greece debt crisis is over:
“Really courageous measures have been taken by the Prime Minister and the government. We called for this measure. It was good set of measures, a convincing and courageous set of measures.”
On whether he would support an EMF:
“We have seen the proposal. It deserves examination. There has been a proposal made by, in particular, academics and a proposal by the Minister of Finance of Germany. I don’t like the word monetary. I would not say it is a monetary fund. That being said, we have to look at it. I have not yet a position of the governing council of the ECB. On such an important matter I need a decision and orientation of the governing council. It is up to the government, the executive branches, to see what they want exactly. I see it as built with very, very strong conditionality if it were decided, fully in line with the stability pact and judgment made by the council, mainly by the governments, upon the proposal of the commission in with the ECB.”
On Greece’s decisions amidst the debt crisis:
“I trust that what they have decided to do…will convince the markets that they are going in the right direction. That is my working assumption.”
On whether the ECB would bail out Greece and other struggling European nations:
“It is not the ECB which is at stake; it is the governments of Europe. They have said in their summit that they stood ready to do whatever was necessary to maintain financial stability in the Euro area. I stick to that statement myself.”
On rising debt in European nations regardless of the 3% collateral rule:
“You’re right; we have to improve the preventative side of the pact. All industrial countries are unfortunately in the same situation. It is a problem of all of us, all industrialized countries have been hit by the crisis. We all have to take care of our fiscal situations. We all have to be convincing vis a vis our own people and markets that we can go back to a sustainable pace.”
On whether JP Morgan and other banks used derivatives to make it more expensive for Greece to borrow money:
“I am prudent in this respect. It is clear that the situation was judged by the market in general as abnormal. It is part of the overall lessons to be learned from the crisis. We have to look at the factors of instability that still exist and are a possible threat for the future.”
On the question of whether the Euro will last:
“Our definition of price stability was less than 2 percent, close to 2 per cent. At the end of this year, after 12 years of Euro, we will be at 1.95 percent, so in line with our definition. This currency…has delivered what was promised to our people.”
On whether the Euro should be the global reserve currency:
“We did not create the Euro against the dollar, we’d be totally stupid. We created the Euro for the single market. I have the best possibly relationship with the Federal Reserve. Without our very close cooperation, we would not have coped with the dramatic crisis we coped with. The Euro is for Europe, we don’t have any battle with the Dollar.”
On kicking finically instable countries out of the Euro zone:
“We all have problems. They all have to take the appropriate decisions. All of us in Europe, in the rest of the world, the preventive aspects of the fiscal policies we must avoid to be plunged again into that situation.”
On inflation in the Eurozone:
“We are absolutely determined to preserve price stability. We are permanently alert. Our interest rates are appropriate.”
