FRANKFURT (MNI) – Financial activities cannot neglect the interests
of the real economy, European Central Bank President Jean-Claude Trichet
said Thursday.
The financial industry and the real economy must share a common
goal, Trichet urged in remarks prepared for delivery at a university in
Lisbon hours after the monthly press conference.
The financial crisis shows that tighter regulation and supervision
is needed to overhaul the financial system, he said, but “excessive” or
“ill-designed” regulation “may counteract our intentions.”
“A fine line needs to be drawn between ensuring financial
efficiency — and financial innovation is an important ingredient of
efficiency — and financial stability,” he warned.
Indeed, “Reforms should be designed” to ensure “that those segments
of finance, which remain faithful to the mission of providing functional
services to the real economy, are not put at an economic disadvantage,”
he pleaded.
Just as employers have a social responsibility to their employees,
“banks bear a social responsibility for savers and for society as a
whole,” he explained. Reforms to the financial system “must be targeted
at internalizing this social responsibility in business strategies so
that what is collectively optimal is selected by profit-maximizing
business units.”
“A courageous overhaul of the financial system will also help to
bridge the rising gap that has emerged between the financial sector and
the real economy,” he said.
“We cannot afford financial activities that neglect the interest of
the real economy,” he stated. “Indeed, the financial industry and the
real economy must share a common goal.”
“Only united will they contribute to strong, sustainable and
balanced growth and to future economic prosperity,” he concluded.
Trichet made no mention of current monetary policy, the economic
outlook or the crisis in Greece in his prepared remarks.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
[TOPICS: MT$$$$,M$$FX$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]
