BERLIN (MNI) – European Central Bank President Jean-Claude Trichet
on Tuesday defended the central bank against criticism regarding its
non-standard policy instruments.
In a hearing at the European Parliament, Trichet reminded that “the
worst crisis since World War II is still there and hitting us.” He
warned not to be in denial of this fact, something which would be “the
most terrible mistake that we could make.”
“We must be lucid,” Trichet stressed. “We are the epicenter of this
global crisis; we would call for governments to be up to their
responsibilities.”
The ECB has conducted its non-standard policy “as prudently and
cautiously as possible,” Trichet said. He noted that the balance sheet
of the ECB has increased since the start of the crisis only by 77%
compared to 226% at the US Federal Reserve.
Regarding the ECB’s bond buying program, Trichet said the central
bank had reactivated it in August only after Eurozone governments agreed
to let the European Financial Stability Facility (EFSF) intervene itself
in secondary bond markets, pending approval by the 17 national
parliaments of Eurozone countries. “This was absolutely decisive in our
decision,” he stressed.
The ECB President emphasized that the central bank intervenes only
if there are problems with monetary policy transmission. “As regards
governments, we consider it is their responsibility to ensure financial
stability,” he insisted.
Trichet once again underlined that the current crisis is not a
crisis of the euro but of sovereign debt. “It is very important to
distinguish between the euro itself and the present crisis we have to
cope with,” he said.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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