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Introductory statement with Q&A

Jean-Claude Trichet, President of the ECB,
Lucas Papademos, Vice President of the ECB
Lisbon, 6 May 2010

Jump to the transcript of the questions and answers

Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference here in Lisbon. I would like to thank Governor Constâncio for his kind hospitality and express our special gratitude to his staff for the excellent organisation of today’s meeting of the Governing Council. We will now report on the outcome of this meeting.

Based on its regular economic and monetary analyses, the Governing Council decided to leave the key ECB interest rates unchanged. The current rates remain appropriate. Taking into account all new information since our meeting on 8 April 2010, we expect price developments to remain moderate over the policy-relevant horizon. Global inflationary pressures – driven mainly by price developments in commodity markets and in fast-growing economic regions of the world – are still being counteracted by low domestic price pressures. The latest information has also confirmed that the economic recovery in the euro area continued in the early months of 2010. We expect the euro area economy to expand at a moderate pace in 2010, but growth patterns could be uneven in an environment of high uncertainty. Our monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth. Overall, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. Inflation expectations remain firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term. The firm anchoring of inflation expectations remains of the essence. Monetary policy will do all that is necessary to maintain price stability in the euro area over the medium term. Accordingly, the Governing Council will continue to monitor all developments over the period ahead very closely.

Let me now explain our assessment in greater detail, starting with the economic analysis. Euro area economic activity has been expanding since mid-2009, after a period of sharp decline. Notably, the economy has benefited from the ongoing recovery in the world economy, the significant macroeconomic stimulus provided and the measures adopted to restore the functioning of the banking system. Recent economic data – including positive survey indicators – support the view that the economic recovery in the euro area is continuing in 2010. While adverse weather conditions, in particular, dampened growth in the early part of the year, some strengthening appears to be taking place during the spring. Looking ahead, the Governing Council expects real GDP to expand at a moderate pace. The ongoing recovery at the global level, and its impact on the demand for euro area exports, should provide support to the euro area economy. At the same time, the financial crisis is expected to have a dampening effect on economic growth given the ongoing process of balance sheet adjustment in various sectors and the expectation of low capacity utilisation and weak labour market prospects.

The Governing Council continues to view the risks to this outlook as broadly balanced, in an environment of high uncertainty. On the upside, the global economy and foreign trade may recover more strongly than projected and confidence may improve more than expected, with the result that the recovery becomes self-sustained. On the downside, concerns remain relating to renewed tensions in some financial market segments. In addition, a stronger or more protracted than expected negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, and the intensification of protectionist pressures, as well as the possibility of a disorderly correction of global imbalances, may weigh on the downside.

With regard to price developments, euro area annual HICP inflation was 1.5% in April 2010, according to Eurostat’s flash estimate, after 1.4% in March. This is somewhat higher than expected a few months ago and appears to be related, in particular, to upward pressure in energy prices. Looking ahead, global inflationary pressures may increase, driven mainly by price developments in commodity markets and in fast-growing economic regions of the world, while euro area domestic price pressures are still expected to remain contained. As a result, overall inflation rates are expected to be moderate over the policy-relevant horizon. Inflation expectations over the medium to longer term continue to be firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term.

In the near term, given the developments in energy prices, risks to earlier projections for HICP inflation are tilted somewhat towards the upside, while risks to price stability over the medium term are viewed as still remaining broadly balanced. Upside risks over the medium term relate, in particular, to the evolution of commodity prices. Furthermore, increases in indirect taxation and administered prices may be greater than currently expected, owing to the need for fiscal consolidation in the coming years. At the same time, risks to domestic price and cost developments are contained. Overall, we need to monitor closely the future evolution of all available price indicators.

Turning to the monetary analysis, the annual growth rate of M3 remained slightly negative, at -0.1%, in March 2010. Together with the continued negative annual growth in loans to the private sector – -0.2% in March – the latest data further support the assessment that the underlying pace of monetary expansion is moderate and that the inflationary pressures over the medium term are contained. Shorter-term developments in M3 and loans have also remained muted.

The actual growth in M3 is seen as weaker than the underlying pace of monetary expansion, as the rather steep yield curve continues to foster the allocation of funds into longer-term deposits and securities outside M3. At the same time, the still narrow spreads between the interest rates paid on different M3 instruments imply low opportunity costs of allocating funds to overnight deposits rather than other M3 instruments. This is reflected in the continued marked difference between weak annual growth in M3 and strong annual growth in M1, which was 10.9% in March. However, with the current interest rate constellation already in place for some time, the latest data suggest that the large shifts in the allocations of funds are waning.

The annual growth of bank loans to the private sector remained negative in March, but this conceals a further positive monthly flow. It also conceals ongoing opposite developments at the sectoral level, with positive, increasing annual growth in loans to households on the one side, and negative annual growth in loans to non-financial corporations on the other side. While the lagged response of loans to non-financial corporations to economic activity is a normal feature of the business cycle, the data over the past few months point to a possible discontinuation of the earlier downward trend in annual loan growth.

The latest data also confirm that the reduction in the size of banks’ overall balance sheets has not continued since the turn of the year. However, further adjustments cannot be ruled out and the challenge remains for banks to expand the availability of credit to the non-financial sector when demand picks up. To address this challenge, banks should turn to the market and use present funding conditions to strengthen further their capital bases.

To sum up, the current key ECB interest rates remain appropriate. Taking into account all new information since our meeting on 8 April 2010, we expect price developments to remain moderate over the policy-relevant horizon. Global inflationary pressures – driven mainly by price developments in commodity markets and in fast-growing economic regions of the world – are still being counteracted by low domestic price pressures. The latest information has also confirmed that the economic recovery in the euro area continued in the early months of 2010. We expect the euro area economy to expand at a moderate pace in 2010, but growth patterns could be uneven in an environment of high uncertainty. A cross- check of the outcome of our economic analysis with that of the monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth. Overall, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. Inflation expectations remain firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term. The firm anchoring of inflation expectations remains of the essence. Monetary policy will do all that is necessary to maintain price stability in the euro area over the medium term. Accordingly, the Governing Council will continue to monitor all developments over the period ahead very closely.

As regards fiscal policies, we call for decisive actions by governments to achieve a lasting and credible consolidation of public finances. The latest information shows that the correction of the large fiscal imbalances will, in general, require a stepping-up of current efforts. Fiscal consolidation will need to exceed substantially the annual structural adjustment of 0.5% of GDP set as a minimum requirement by the Stability and Growth Pact. The longer the fiscal correction is postponed, the greater the adjustment needs become and the higher the risk of reputational and confidence losses. Instead, the swift implementation of frontloaded and comprehensive consolidation plans, focusing on the expenditure side and combined with structural reforms, will strengthen public confidence in the capacity of governments to regain sustainability of public finances, reduce risk premia in interest rates and thus support sustainable growth over the medium term. In this context, the Governing Council welcomes the economic and financial adjustment programme which was approved by the Greek government following the successful conclusion of the negotiations with the European Commission, in liaison with the ECB, and the International Monetary Fund, with a view to safeguarding financial stability in the euro area as a whole.

For all euro area countries, structural reforms leading to higher growth and employment are crucial to support a sustainable recovery. In view of the recent rise in unemployment, tax and benefit systems that set effective incentives to work, improved training schemes and sufficient flexibility in labour contracts are required in order to avoid an increase in structural unemployment. At the same time, existing competitiveness problems, as well as domestic and external imbalances, need to be urgently addressed by the countries concerned. To that end, wage-bargaining institutions that allow wages to adjust appropriately to losses in competitiveness and the unemployment situation are indispensable. Likewise, measures that increase price flexibility and non-price competitiveness are essential. Finally, an appropriate restructuring of the banking sector should play an important role. Sound balance sheets, effective risk management and transparent, robust business models are key to strengthening banks’ resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability.

We are now at your disposal for questions.

* * *

Transcript of the questions asked and the answers given by Jean-Claude Trichet, President of the ECB, and Lucas Papademos, Vice-President of the ECB

Question: Mr Trichet, I have three questions for you.

The first one is: is the purchase of government bonds an option to fight the consequences of Greece’s fiscal crisis on financial markets? Did you discuss this option today?

The second one is: does the European Union, in your opinion, need an orderly default procedure for its member countries?

And the third one would be: why did you decide to suspend the rating requirement for Greek government bonds alone? Would it not have been more of a signal to say: “We accept all government bonds from all member countries, full stop”?

Trichet: On your first question, we did not discuss this option.

On the second question, we did not discuss anything like default or such a default procedure at all. On the contrary, as you know, we are firmly of the view that Greece, which is the country that I quoted in my introductory remarks, will not default.

And I will come to Greece now because it’s the third question. The position of the Governing Council is as follows. There are three major reasons that enlightened the Governing Council when, last Sunday, we took the decision on the Greek government bonds’ eligibility.

The first consideration is that we had ourselves called very strongly for Greece to embark on a recovery programme; an adjustment programme which would be very ambitious. I myself made the point very strongly on behalf of the Governing Council in the meeting of the Heads of State and Government that took place in February. As a consequence of this recommendation, we had a recovery programme; an adjustment programme, which has been negotiated. We were part of these negotiations because the Governing Council had accepted that we would be in liaison with the European Commission, and we had several experts on the spot in Athens to follow up and be very alert in these negotiations. You might remember that Jürgen Stark also went to Athens with Commissioner Olli Rehn to follow what was going on in terms of the recovery programme. That is a very important point.

Second important point: we had been called to make a judgement as a fully independent institution on the quality of the programme that had been negotiated by the European Commission in liaison with us and by the IMF. The Governing Council decided that this recovery programme was appropriate, and I conveyed this positive Governing Council judgement on the multi-year recovery programme of Greece to the governments of Europe – they had asked for our independent assessment, we made this assessment and it was conveyed to the governments of the euro area as early as during the Eurogroup meeting also last Sunday.

Third point: we were also asked by the Heads of State and Government, to make an independent judgement on whether or not it was appropriate for them to activate the bilateral loans that they envisaged. Their own decision would be taken only on the basis of our independent judgement, as well as that of the European Commission. And, taking into full consideration the situation of the recovery programme of Greece, the Governing Council decided that it would indeed tell the governments that there was a case for activating the bilateral loans that, together with the IMF contribution, would finance the multi-year recovery programme. It is on the basis of these three points that we considered that we were ourselves sufficiently aware of the recovery programme of Greece and determined to approve this recovery programme. We had to be consistent with this judgement as regards the eligibility of the Greek government bonds. Again, we took these decisions on the very same day, which was last Sunday, and, as you know, it was of course made public last Monday. That is the response to your third question.

Question: You said you did not discuss the option of buying government bonds. Can you consider discussing it in the absence of deflationary dangers in the euro area?

Second question: has the ECB recently made margin calls on the declining value of euro area sovereign bond collateral? If not, which bonds have been included and excluded, and what would be your plan going forward?

And, finally, has saving the euro area become the prime target for the ECB, trumping even ensuring price stability?

Trichet: On the sovereign bonds, I have already said that we did not discuss the point.

On your second point, I would say that we permanently review what we are doing, but at the present moment we are applying what we have decided as regards our rules.

On the third point, this is a very important one: we are inflexibly attached to price stability. It is our primary mandate. It is what the people of Europe have asked of us. And we are credible in this respect. I have already told you that, at the end of the year, depending, of course, on ultimate adjustments, we will post average inflation over the first 12 years of the euro at a level which will be below, but close to, 2 per cent, i.e. exactly in line with the definition of price stability we gave twelve years ago. This is a remarkable result, not only because we did what we had said we would do – in this domain, as in all others, as you know, what counts are facts and figures – and demonstrated capacity to ensure price stability; it is also remarkable because, with this record, we would be in a better price stability situation than what has been observed in any particular country in the euro area in either the 1990s or 1980s, not to mention the 1970s, which everybody knows was a period of very high inflation. So this is a remarkable demonstration of our inflexible attachment to price stability in the euro area. And when we had to cope with the start of the financial crisis in 2007 and 2008, you remember that we always had a sense of direction; we took a number of non-conventional measures which never hampered the anchoring of inflation expectations. It is what we do now and will continue to do with great determination.

Question: You said at the weekend that there had been no decision made on the subject of purchases of government bonds. I have seen that Axel Weber was referring to that yesterday when he indicated that he would not support it. Why was it not discussed at the meeting? If it has not been discussed at the meeting, does it mean that it is off the table and that you still have made no decision, or that you have made a decision about it?

And secondly, just on the orderly default process which has been suggested by some politicians in Germany: you mentioned that was not discussed by the Governing Council today but what is your view on the necessity for an orderly default process for a sovereign state in the single currency zone?

Trichet: On your last question, I think that default is out of the question. It is as simple as that.

As regards your first question, I never comment on what colleagues say. I will simply repeat that we did not discuss the matter and I have nothing further to say.

Question: Could you please tell us whether every single member of the Governing Council was in favour of changing the eligibility of Greek collateral?

And then also could you envisage a situation where you expand this special arrangement to other euro area nations that might be in need? And third, could you please tell us whether the EU tranches of aid to Greece will have seniority over the existing debt? And if there is no seniority, how will you explain it because in the end it is taxpayers’ money and should not this deserve to have seniority?

Trichet: On the first question, we were unanimous in asking Greece to embark on a recovery programme. We were unanimous in forming a positive judgement on the recovery programme that has been negotiated by the European Commission, in liaison with us, and by the IMF. We were unanimous in making the judgement –which I communicated, on behalf of the Governing Council, to the governments of the euro area – that there was a case for activating the loans which, together with the IMF, would finance the programme. We had a very important discussion on how to be consistent with these three unanimous decisions in the present circumstances and whether or not we had a better understanding, taking all that into account, or rating agencies had a better understanding of what the situation was in Greece. An overwhelming majority was of the opinion that we had to take the decision that was taken last Sunday, in order to be fully consistent.

I think your last point is a question for the governments. They are making the loans, not us. They have to decide exactly what they will do. To my knowledge, the IMF has a general privilege of seniority which is part of the overall global institutional framework. That is my understanding, but it is up to governments, of course, to respond to this question.

Question: You said you felt that you are in a better position to judge the situation than the rating agencies. That is the assumption that you seem to have made. Is the logical conclusion from that, that you are now in a better position than the rating agencies to judge the creditworthiness of other European nations?

Trichet: I have only said that we had three major unanimous decisions by the Governing Council that explain the decision that we took on Sunday. This is specific to Greece, of course.

Question: Can you see a situation where you need to expand that whole programme, and does it seem as if the ECB would be in a better position to judge the creditworthiness of these countries?

Trichet: I am referring only to Greece. I am explaining the decision only on Greece. We have had absolutely no involvement in any other cases in which the ECB has itself negotiated the recovery programme, made a judgement on the recovery programme, and told the Heads of State or Government that they themselves had to invest in the form of bilateral loans. So I think it is sufficiently clear.

Question: You’ve talked mostly about Greece, but obviously in the financial markets there are other countries, like Portugal and Spain, that came under pressure recently. What is your comment in terms of what you see as the economic fundamentals and whether they warrant the scepticism of the financial markets?

And secondly the euro has come under pressure in the last few weeks. Are you at all worried that it is becoming a disorderly decline?

Trichet: On your first point, you heard what we said and I think it is worth going back a little bit. As I said, the ECB has always been inflexibly attached to price stability and to the solid anchoring of inflation expectations. And we have proved this with better results than any other results over previous decades. So that is very important. We have always said that there were two sides of the coin of EMU: the “E” and the “M”. We are responsible for the “M” and we do our own work as well as possible, and I am speaking of course on behalf of the whole Governing Council. Then there is the “E”, which is the economic union. And the “E” calls for a Stability and Growth Pact that would be fully respected, in letter and spirit. In 2004 we defended the Stability and Growth Pact against successive attacks. We defended it very fiercely. And you might remember that the President of the Commission of the time was saying that it was a stupid pact. And you might also remember that several Heads of State and Government of the time, in particular the Chancellor of Germany and the President of the French Republic, were calling for it to be scrapped. We defended it with extreme determination as it is, as I said, one of the two crucial sides of the coin of EMU. And we are constantly calling for the implementation of the Pact with great determination. And you heard what I said a moment ago on behalf of the Governing Council as regards fiscal policies and structural policies, and the monitoring of relative competitiveness. This is essential. This recommendation is addressed to all countries concerned.

Question: I’d like to ask you if you are concerned at all about the volatility of the euro as a result of Greece’s fiscal problems?

My second question is: how strong do you think the contagion risks are for countries like Portugal, Spain and Ireland, and why do you think the UK is not a focus of investors right now?

And my final question is: will you change the normalisation of the liquidity provision to banks and did you discuss reintroducing some of the measures you have already suspended in the past months?

Trichet: I have already responded to your first question.

Again, our message for all euro area member countries is the same and all of them should recognise what is, for them, the exact implementation of the recommendation that we are making.

On the last point, we considered that the improvement we are observing on the market fully justified the progressive and gradual phasing-out of our non-conventional measures. These non-conventional measures are still there, as you know, in particular for the one-week main refinancing operations and for the one-month operations. That is absolutely clear. We have there a full allotment, fixed rate supply of liquidity. As regards the three-month operation where we re-introduced the variable rate tender, I will only say that it is not our intention at all that the result of this tender would put the interest rate significantly higher than 1%. To be frank, we are aiming for it to remain close or very close to 1%. That is the intention of the Governing Council at the moment.

Question: First question: Do you believe there should be a European rating agency?

And the second question: The 5% interest rate on the loans to Greece – do you think it is feasible for the Greek government to pay that interest rate?

Trichet: On your first question, I would say that it is an open question – not only in Europe, but also in the rest of the world – as to whether or not we have the optimal configuration with its present constellation of rating agencies. In this domain, as in many others, it is perhaps a case of “the more competition, the better”. But I myself will not pronounce on that and I have no Governing Council position to report on the precise question of whether or not we are calling for a European rating agency. In any case, it seems to me that it is something which should be examined, again, not only in the European context, but also at the global level.

As regards your second question, this is a decision for governments. All the governments concerned have examined the case very carefully. It is their decision. And I would say that this is part of the adjustment programme, which we ourselves have judged to be positive and worthy of being financed, as I have already said two or three times.

Question: The markets seem to be putting Portugal and Greece in the same boat. Do you think they really are in the same boat? And do you think that Portugal may need financial help like Greece did?

Trichet: Greece and Portugal are not in the same boat, and this is very clear when you look at the facts and figures. Facts and figures are essential. Portugal is one of the 15 other economies and countries in Europe to which the messages I have signalled are addressed. And as I have said we expect all countries to carry out the necessary adjustments and recovery programmes upfront and take the appropriate decisions. But again, Portugal is not Greece. That is absolutely obvious when you look at the figures

Question: How concerned are you about a two-speed recovery in the euro area complicating monetary policy?

Trichet: I would say that we have observed since the very establishment of the euro that the various economies have not been growing at the same speed. That is clear and it has been the case since 1999. Also now we are observing that there are such differences between the various countries. We are looking at the euro area as a whole – the 330 million people of the euro area. And it is of course up to the various authorities in each country to take into account the fact that they have the privilege of belonging to a vast single market with a single currency and to take the appropriate decisions, taking into account their own situation. I mentioned in my introductory remarks that we consider that, taking everything into account, we are currently seeing confirmation of the recovery in the euro area, even if growth may be uneven. That being said, it is also true that we have had some recent soft data that were quite encouraging. And even today, we have had additional national figures, for instance, which were unexpectedly good. So again, let’s remain prudent and cautious, but we have very recently had some news that was better than expected. That does not mean that the first quarter of this year will be flattering. We know that the first quarter will not be flattering at all, in particular because of the weather conditions.

Question: Do you judge the effect of the downgrading of rating agencies if it is not appropriate to be pro-cyclical? This is first question.

And if it is, what are you doing to do against that if there is no plan for a European rating agency. Are you advocating perhaps this competence to judge about sovereign state as you did in fact?

Trichet: We are pursuing a very deep analysis at the global level. The issue of whether or not we have pro-cyclical factors that are adverse in terms of financial stability in the behaviour of rating agencies, whether we have conflicts of interest and so forth, is part of the discussion in the G20, is part of the discussion at the level of the Financial Stability Board. It is work in progress. The problem is not particularly for us, it is a global issue and we have to give global responses. This is one of the areas where we can see that there are elements of pro-cyclicality that have to be fully elucidated. We are working at this stage in Europe and at the global level on what could be the best possible avenues. I do not want to prejudge the results of this discussion.

Question: I have three questions: you have urged the banks to lend to the non-financial sector. Given the difficulties in the financial markets, I was wondering if at any point you might be worried about the fact that governments might in fact dry up the available credit that would otherwise go to companies and families. Is that something that worries you or not?

The second question is, would the euro zone actually have the money to help Portugal and Spain, as it has been done for Greece?

And finally, you are calling it a recovery plan, but the markets seem to see it as an austerity plan. And you are totally confident that it will succeed, but signals we have been receiving from the markets this week show some scepticism. What in your view explains this difference of perception in what is happening in the crisis at this point?

Trichet: On your first question, I would say we are looking very carefully at every situation and I would not qualify our attitude as anything but being permanently alert and monitoring the situation.

As regards the second question, I said already that Portugal is not Greece; I would say Spain is not Greece. I would only say that all countries, not particularly those countries, but all countries have to do their job – which is, simplified: to be on a path that would inspire confidence in the medium-term sustainability of their fiscal position vis-à-vis their own households. That is essential for growth because the confidence of households in terms of consumption and investment is essential for the recovery. In turn, the confidence of enterprises having a fiscal environment, which is sustainable and stable in the medium and long term is also essential for growth. And of course it is essential for external observers and investors.

On the last point, I would say I have a unanimous Governing Council – after negotiating with the IMF and with the European Commission. So that is as clear as that. There is a programme which is very serious in our view. This will also be implemented and followed up on a quarterly basis. We will be extremely alert to follow up the implementation of the programme together with the European Commission and of course it will be done also by the IMF on a quarterly basis. That is the reason why we consider that, we could recommend – and it was a very important decision for us to take – to the governments that they could step in and invest in the form of bilateral loans in the recovery of Greece.

Question: I have a more fundamental question. Certainly in the United States, but also in my country, there is a growing feeling that we would all be better off without the euro, in economic terms, and I wonder what you would respond to those critics of the concept of having a euro area and a common currency.

Trichet: I do not think that there is any such sentiment in the Governing Council. We consider – and, to my knowledge, it is also the sentiment of all Heads of State or Government who I know – that belonging to the euro area has brought an enormous number of advantages, as we have always said. Of course, it also calls for responsible attitudes as regards the three major areas that we have already mentioned, namely fiscal policies, which are a national responsibility, structural reforms, which are also very largely a national responsibility, and, although this is an oversimplification, the appropriate monitoring of unit labour costs.

Question: Two, hopefully fairly short questions: firstly, there is no mention of your exit strategy in the introductory statement. I think it has been dropped. Shall we read anything into that? Is there any reason why you have dropped it? There may be some suspicion that the process may be slowed down.

And a second question related to that perhaps: throughout the last three years you have always emphasised how the ECB is able to react flexibly with speed to fast changing circumstances. I wonder whether that still applies in the current situation where we obviously have escalating financial market tensions related to fiscal problems within the euro area. Do you regard the ECB as remaining as flexible and as responsive as ever or are you simply leaving it up to governments to do their job?

Trichet: On the first point, this gradual and progressive phasing-out of the non-conventional measures has been kept permanently under review by us – and, of course, with a view to observing market developments very carefully. So do not over interpret the fact that we have not mentioned this particular point in the communiqué. We had a number of other points that were in the communiqué, so you could say that we had to make some room for the new points.

Second, regarding the remarkable capacity of the Governing Council of the ECB to take decisions that are not usual and to do that rapidly, I can illustrate that in the case of Greece, with the three elements that I have mentioned, namely the fact that we called for an additional, major recovery programme, the fact that we were involved and made a judgement ourselves on this programme, and the fact that we confirmed to governments that in our opinion they should step in. This is something that is not at all usual. We have never done something like that before and we decided to do so, taking into account the circumstances, in a very swift manner, including the decision we took last Sunday. So, yes indeed, the Governing Council of the ECB is maintaining the same line, which is to be permanently alert and able to take the appropriate decisions, even if they are non-conventional. We have a sense of direction, we know where we are going and we will never put in jeopardy the anchoring of inflation expectations and the delivery of price stability, which is our major asset and which is very strongly demanded by the people of Europe. That being said, yes, we ask each institution and each authority to take responsibility. I have been saying that for many months. Each institution has to take its own decisions commensurate with its own responsibility and I have called strongly for the Eurogroup to take responsibility. We cannot substitute for the governments. The governments have their decisions to take while we have our own role as an independent central bank, and of course we expect each authority to fulfil its own responsibilities.

Question: Mr President, you said that fiscal policy is a national task, but don’t you think that we need more cooperation in fiscal policy in Europe or what is called “gouvernement économique” in your native language?

Trichet: I would entirely agree with you. It is clear that we need a much stricter implementation of the letter and the spirit of the framework that exists for fiscal policy. It is indispensable. I expect that it will be discussed by the Task Force of President Van Rompuy. I really trust that it is one of the major points. But remember that we were a little bit isolated in 2004 in our defence of the Stability and Growth Pact – we were not numerous. Of course, today one could consider that we have been vindicated in this defence.

Question: I was wondering if you are at all concerned that the level of the euro does not reflect economic fundamentals, and what impact does the fall in the value of the euro have for growth and inflation forecasts?

Trichet: I never comment, as you know, on the exchange rate on a day-to-day basis. All I will say is that the euro is a good store of value. As I already said, over the last 12 years we have maintained price stability in an exemplary manner. And for the rest, I will stick to the language agreed with the major authorities of the big floating global currencies.

Question: Your Vice-President is Greek, your next Vice-President is Portuguese, – certainly it is a coincidence. You said that Portugal and Greece are not the same, but I would like your opinion. Could Portugal become the next Greece, and might Portugal need financial help in the future like Greece?

Trichet: I already responded to this question.

On this occasion let me say that I will miss Lucas Papademos enormously, but it is not yet time to say that. He has been a fantastic Vice-President and I will, of course, welcome the new Vice-President, Vítor Constâncio, the remarks of whom and the wisdom of whom we have appreciated enormously in the Governing Council of the ECB. The ECB Governing Council is a very strongly united team, where each of us is convinced that he or she can benefit a lot from the wisdom and viewpoints of the others, and we complement each other well. After all Europe is made up of all of us, and we need to hear all sensitivities, all viewpoints, all wisdom.

And let me say now that, a moment ago, I read a letter which, I understand, has been published today, and I see that two heads of states and governments say “we are fully attached to preserving the solidity, stability and unity of the euro area”. I can say that I could also sign that myself!

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