- Title: BELGIUM: ECB's Trichet warns against sowing seeds of future crises
- Date: 17th February 2009
- Summary: BRUSSELS, BELGIUM (FEBRUARY 16, 2009) (REUTERS) EXTERIOR OF EUROPEAN PARLIAMENT EUROPEAN UNION FLAGS
- Embargoed: 4th March 2009 02:16
- Location: Belgium
- Country: Belgium
- Topics: International Relations,Economic News
- Reuters ID: LVA7DX6BL9DD2CAC8ADCHQ5VT9R5
- Aspect Ratio: 4:3
- Story Text: Policymakers must avoid sowing the seeds of future crises and make sure efforts to revive the economy have a clear exit strategy, European Central Bank President Jean-Claude Trichet said on Monday (February 16).
In a speech to European parliamentarians, Trichet urged governments around the world to keep a medium-term view focused on securing financial and economic stability.
The ECB president called for better regulation so as to address the root causes of the financial market mayhem.
"Our primary and most immediate task as policy-makers is to help resolve this crisis, in cooperation with the private sector. We need to address the fundamental causes underlying the crisis: in the international financial system, in the international setting of macroeconomic policies and in the international financial architecture," Trichet said.
"And yet, we also need to make sure that our decisions today do not lay the ground for similar disorder in the future. We can only do so - and this is my main proposition today - if we design policies in such a way that we do not go back to the status quo ante and instead firmly enshrine in our policies the appropriate focus on ensuring stability over the medium term," he added.
Trichet also said the crisis was, for him, an opportunity not to be missed to restructure the financial system, its configuration and governance.
"The global economy was - and, to a significant extent, still is - imbalanced. It is imbalanced in three domains: in its financial system, in its macroeconomic configurations, and in the governance of the financial architecture. The present crisis does not just offer us an opportunity to rebalance, it provides an obligation to rebalance these three intertwined domains of the global economy. These are the key challenges we must not fail to address, no matter how difficult the related work agenda," he said.
The ECB has cut interest rates by 2.25 percentage points to 2 percent since last October but benchmark euro zone rates remain higher than those in other developed economies. Euro zone governments have also announced extra spending to stimulate their national economies, along with governments around the world as the global economy falters.
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