ECB Trichet: Nobody Is Challenging The Euro As A Currency: TV

Author: Market News International | Category: News

PARIS (MNI) – Despite the turbulence in European debt markets, the
euro itself is not in doubt, European Central Bank President Jean-Claude
Trichet said Tuesday evening in a television interview.

Asked by Euronews whether the single currency could be saved,
Trichet retorted: “The euro is a very solid currency. It has kept its
value remarkably over time — its domestic value and its international
value. And nobody, it seems to me, is challenging the euro as a
currency. If the euro as a currency was challenged, you wouldn’t see
what you observe on the markets.”

The euro has been retaining its strength against the dollar,
despite the Eurozone crisis. It closed at around $1.44 on Tuesday.

Trichet repeated his often-stated view that the Eurozone as a whole
is in a “very solid situation” compared with the fiscal problems of
other major countries. He noted that the euro area in aggregate is
expected to have a public deficit this year equal to 4.5% of GDP, which
is less than half of the 10% forecast for both the U.S. and Japan.

“So what we have in the euro area are problems of credibility of
some [member states'] signatures — not problems for either the euro
area as a whole, on a consolidated basis, or for the currency, of
course,” the ECB chief added.

Trichet dodged a question about whether it might make sense for
some of the Eurozone’s weaker countries to leave the Eurozone. The
question was clearly in reference to Greece, though it was not
explicitly stated. In the past, Trichet had rejected such talk as
“absurd.” But on Tuesday he merely replied that countries “who behaved
improperly in the past have to correct their trajectory.”

He noted that some of the countries that have weathered the current
crisis the best, including Canada and Sweden, had confronted very
serious problems in the 1990s and then corrected them. “So when you have
problems, you draw the consequences, you correct your trajectory and you
are much more resilient.”

Trichet said that in response to what he called “the gravest
financial and economic crisis since World War II,” governments must
“very rigorously” implement reforms. “And in Europe in particular we
have a problem of improving governance.”

Trichet once again criticized the “oligopolistic structure” of the
major rating agencies. A very small number of them “exert influence on a
very, very large number of markets, market participants and financial
institutions,” he noted. “But there is no quick fix in this domain, so
we have to also remain prudent.”

Trichet underscored the gravity and reach of the financial crisis.
“It is big in the U.S., big in Japan, big in the rest of the world,” he

–Paris Newsroom, +331-42-71-55-40;

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