Crisis must not be allowed to happen again: ECB's Trichet

By AFP

July 15, 2010 Updated Jun 14, 2009 at 9:41 PM CDT

European Central Bank President Jean-Claude Trichet urged governments and financial market players Friday to do everything to ensure that the global financial crisis does not happen again.

"Our duty is to considerably reinforce the resilience of the global financial system and the soundness of the real global economy," Trichet said in a public lecture in the Bulgarian capital.

"We should not allow that, a few years from now, a new crisis would emerge that would be similar to the current one. That would be unforgivable," he added.

Trichet said that the global economic environment remained difficult and unpredictable, urging bank and government authorities "to remain alert."

"There is no place for complacency ... As concerns direct government support to the financial sector, today's priority is 'rapidity of execution'. Decisions that have already been taken should be implemented swiftly."

This was particularly true of government-promised aid to banks, the ECB chief said.

"Currently, only about 55 percent of funds earmarked for recapitalisation have been used in the euro area," he said.

Trichet declined to comment on eurozone interest rates, which the ECB has lowered to a record low of 1.0 percent.

But he defended the ECB's interest rate policy, insisting it had succeeded in curbing the markets' inflation expectations.

"Long-term inflation expectations in the euro area ... have been and continue to be firmly anchored at levels consistent with our definition of price stability," he said.

"Inflation expectations have been exceptionally resistant to sudden upward short-term price changes, and we have ensured that is also the case with sharply falling inflation," Trichet said.

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