Introductory statement with Q&A

Jean-Claude Trichet, President of the ECB,Vítor Constâncio, Vice-President of the ECBFrankfurt am Main, 8 July 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. We will now report on the outcome of today’s meeting, which was also attended by Commissioner Rehn.

Based on its regular economic and monetary analyses, the Governing Council views the current key ECB interest rates as appropriate. It therefore decided to leave them unchanged. Taking into account all the new information which has become available since our meeting on 10 June 2010, we continue to expect price developments to remain moderate over the policy-relevant medium-term horizon, benefiting from low domestic price pressures. The latest information has also confirmed that the economic recovery in the euro area continued in the first half of 2010. Looking ahead, we expect the euro area economy to grow at a moderate and still uneven pace, 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 our 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 needed to maintain price stability in the euro area over the medium term. This is the necessary and central contribution that monetary policy makes to fostering sustainable economic growth, job creation and financial stability. All the non-standard measures taken during the period of acute financial market tensions, referred to as “enhanced credit support” and the Securities Markets Programme, are fully consistent with our mandate and, by construction, temporary in nature. We remain firmly committed to price stability over the medium to longer term. The monetary policy stance and the overall provision of liquidity will be adjusted as appropriate. 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. After a period of sharp decline, euro area economic activity has been expanding since mid-2009. Euro area real GDP increased, on a quarterly basis, by 0.2% in the first quarter of 2010, according to Eurostat’s second estimate. The latest economic data and survey-based indicators suggest that a strengthening in economic activity took place during the spring. The Governing Council expects real GDP to grow at a moderate and still uneven pace over time and across economies and sectors of the euro area. The ongoing recovery at the global level and its impact on the demand for euro area exports, together with the accommodative monetary policy stance and the measures adopted to restore the functioning of the financial system, should provide support to the euro area economy. However, the recovery in activity is expected to be dampened by the process of balance sheet adjustment in various sectors and labour market prospects.

In the Governing Council’s assessment, the risks to the economic outlook are broadly balanced, in an environment of high uncertainty. On the upside, the global economy and foreign trade may recover more strongly than projected, thereby further supporting euro area exports. On the downside, concerns remain relating to renewed tensions in financial markets, with possible further adverse effects on financing conditions and confidence. In addition, a stronger or more protracted than previously expected negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, and 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 1.4% in June, according to Eurostat’s flash estimate, after 1.6% in May. In the next few months annual HICP inflation rates are expected to display some further volatility, with a tendency towards somewhat higher rates later in the year. Looking ahead, in 2011 inflation rates should overall remain moderate, benefiting from low domestic price pressures. 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.

Risks to the outlook for price developments are 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, the Governing Council will monitor closely the future evolution of all available price indicators.

Turning to the monetary analysis, the annual growth rate of M3 was unchanged at -0.2% in May 2010. The annual growth rate of loans to the private sector increased slightly further but, at 0.2%, remained weak. Together, these data continue to support the assessment that the underlying pace of monetary expansion is moderate and that inflationary pressures over the medium term are contained. Shorter-term developments in M3 and some of its components and counterparts have remained volatile and, given the continued tensions in some financial market segments, this volatility may well persist.

The previously strong impact of the interest rate constellation on monetary dynamics appears to be gradually waning. This implies that actual M3 growth is less affected than before by the downward impact of the steep yield curve and the associated allocation of funds into longer-term deposits and securities outside M3. Moreover, the impact that the narrow spreads between the interest rates paid on different M3 instruments have on shifts within M3 towards M1 should be diminishing. However, at 10.3%, annual M1 growth is still very strong.

The still weak annual growth rate of bank loans to the private sector continues to conceal countervailing developments, with positive growth in loans to households and negative growth in loans to non-financial corporations. While the monthly flow in bank loans to non-financial corporations was positive in May, in the light of the volatility observed in recent months it is too early to judge whether this signals a turning point. A lagged response of loans to non-financial corporations to developments in economic activity is a normal feature of the business cycle.

The data up to May confirm that the size of banks’ overall balance sheets has increased since the turn of the year. The challenge remains for banks to expand the availability of credit to the non-financial sector when demand picks up. Where necessary, to address this challenge, banks should retain earnings, turn to the market to strengthen further their capital bases or take full advantage of government support measures for recapitalisation. In this respect, we welcome the decision announced by the European Council to publish, with the consent of the banks involved, the individual results of the stress test exercise for banks in the European Union carried out by the Committee of European Banking Supervisors (CEBS) in cooperation with the ECB. Appropriate action will have to be taken where needed. 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, job creation and financial stability.

To sum up, the current key ECB interest rates remain appropriate. Taking into account all the new information which has become available since our meeting on 10 June 2010, we continue to expect price developments to remain moderate over the policy-relevant medium-term horizon, benefiting from low domestic price pressures. The latest information has also confirmed that the economic recovery in the euro area continued in the first half of 2010. Looking ahead, we expect the euro area economy to grow at a moderate and still uneven pace, 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 our aim of keeping inflation rates below, but close to, 2% over the medium term. The firm anchoring of inflation expectations remains of the essence.

As regards fiscal policies, the focus clearly needs to be on ensuring the sustainability of public finances. In the current environment, all euro area countries must, as a minimum, comply with their fiscal consolidation plans as foreseen under the respective excessive deficit procedures. More ambitious targets, as already adopted by a number of countries, may become necessary where current plans fall short of meeting the main objective of halting and reversing the increase in the government debt ratio. Moreover, all countries must specify credible adjustment measures that are sufficient to attain their budgetary targets for 2010, 2011 and beyond, and must live up to their commitment to take additional measures, where needed, over the coming years.

For the proper functioning of the euro area, and to strengthen the prospects for higher sustainable growth, the pursuit of far-reaching structural reforms is essential. This will also support the process of fiscal consolidation. Major reforms are particularly needed in those countries that have experienced competitiveness losses in the past or that are suffering from high fiscal and external deficits. Measures should ensure a wage bargaining process that allows wages to adjust flexibly to the unemployment situation and losses in competitiveness. Reforms to strengthen productivity growth would further support the adjustment process of these economies.

Let me finally refer to the proposals submitted by the Governing Council to the Task Force on Economic Governance established by the European Council under the chairmanship of President Van Rompuy. In the view of the Governing Council, a quantum leap in terms of progress towards strengthening the institutional foundations of EMU is needed. It is essential that governance and enforcement structures in the economic policy framework of the euro area be strengthened. Reinforcing surveillance of national budgetary policies and ensuring rigorous compliance with the fiscal rules will be key. Furthermore, it is extremely important that close oversight of relative competitiveness developments be implemented and that a surveillance mechanism be established to address imbalances in the euro area countries. At the same time, it is important to establish an appropriate euro area crisis management framework that minimises moral hazard.

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 Vítor Constâncio, Vice-President of the ECB

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Question: Do you think that the current interbank borrowing costs are appropriate? And do you expect them to rise further? And were you happy with the recent increase? In the same context, if you are not happy with the market developments, what options does the ECB have to steer interbank market rates in the future?

My second question is: were there any calls today to suspend the ECB’s bond purchases? Or at least calls to set a date when the programme will expire? Or could you imagine expanding the programme, buying also, for instance, commercial paper?

Trichet: On your first question, I will only remind you of some figures. You remember that we had on 1 July the end of the one-year refinancing operation, which involved an enormous amount of liquidity, 442 billion euro. It has been replaced by the three-month tender of 132 billion euro, and by the six-day operation of 111 billion euro, that we had organised in order to facilitate this transition. The two together, 132 plus 111, amounts to 243. 442 minus 243 equal 199. So there has been a withdrawal of liquidity of 199 billion euro at that moment. The day before yesterday, we had the previous main refinancing operation which was falling due, and we had the six-day operation of the previous week falling due, and that represented 163 plus 111, which makes 274. And we had the new main refinancing operation amounting to 229. So, the difference between the two was an additional withdrawal of 45 billion euro of liquidity. 199 plus 45 equals 244 billion euro of liquidity that has been withdrawn, all taken together. We knew that we would have this phenomenon taking into account the enormous maturity which was falling due. So, I only draw your attention to that. It is not necessarily surprising that you have some observations on the behaviour of the market. It would reflect the fact that we are in such a situation of liquidity withdrawal. But it was the will of the banks, because they had an unlimited supply of liquidity in all those operations. I wanted to give you the figures that are behind what is being observed in the market. I have no other comment on that point. I would say that we are still in a mode of unlimited supply of liquidity, for the one-week main refinancing operation, and the one-month and three-month operations. We already took the decision, as you may remember, to have several successive three-month operations in that mode.

As regards your second question on the Securities Markets Programme, I can only say that we are examining the situation. We did not change in any respect the purpose of the programme. Because you are observing what we are doing every week, you see the amount of the operations under this programme. And we have the feeling that what is needed in terms of the level of interventions from us has been progressively diminishing, but we will continue to observe this with great attention. Again, we are continuing to monitor the programme very carefully.

Question: The French finance minister Christine Lagarde said today that we are in the middle of the beginning of the end of the sovereign debt crisis. I had to think about that twice. Where would you evaluate we are at the moment? Has the situation relaxed from your point of view, or should we be careful not to drop the ball?

And in terms of the stress test for the banks, the ECB and many of the national central banks are very much for the publication of the stress test; from your point of view, what will it do for us, what can it do for the market?

Trichet: On the first point, I would say again that we are observing the situation carefully. I think it is not untrue to observe that there is a tendency for the secondary market to function a little bit better, but I think it is too early to draw a definitive conclusion. What is clear is that for reasons that are complex, it seems to me that a lot of important new information – for instance all the positive decisions that have been taken, the fact that the various countries concerned have changed and improved their fiscal policies in comparison with what existed some months ago, in some cases some weeks ago, and the fact that a number of very important decisions have been taken by the European executive branches and by institutions such as the IMF – is being progressively captured and incorporated by market participants, investors and savers in their own analysis. Not surprisingly so, particularly taking into account that many of these decisions were considered extremely difficult to take, even impossible or extremely unlikely. So, again, the fact that investors, savers and market participants are progressively incorporating this new information into their own decisions is something which seems natural. It seems to me that we are observing this phenomenon. Again it is an ongoing phenomenon and I remain prudent and cautious. But what I always thought and the Governing Council thought was that some of the market analysts, investors and savers were much too pessimistic about the ability of the Europeans to take the appropriate decisions, whether at the level of the various governments as regards their own policies or at the level of Europe as a whole, the 27, as well as the 16.

On the stress tests, I would confirm that the ECB has been calling for the stress test to be as well-conducted as possible, not only at the level of macro stress tests, as had been envisaged since a long period of time, but also at the level of individual banks. We were very happy when the European Council decided that it would be done at the level of individual banks. As you may remember, the important decisions were taken at the level of the ECOFIN Council on 2 December 2009. So it is an old story. It started in December 2009 at least at the level of this decision of the ECOFIN. It was on 17 June that the European Council asked for the publication. We consider it very important that it has been decided to publish the results at the level of individual banks and we are following that very carefully. As you know, the stress tests are being finalised by the national supervisors and the Committee of European Banking Supervisors (CEBS) in close cooperation with the ECB, and the Vice-President has been extraordinarily active in this cooperation with CEBS over the last days and weeks.

Question: Can you confirm that governments falling short of cash to recapitalise the banks if needed can access funds from the EU’s emergency loan facility set up in May? And are you at all concerned that potential recapitalisation needs uncovered by these stress tests could exacerbate the euro zone’s sovereign debt crisis?

And also, just a small detail related to that, you say that the results will be detailed on an individual bank level. Will we get full details of every single bank?

Trichet: As regards your first point, if and when there is a mobilisation of the stabilisation fund, we will see exactly what is decided by the authorities concerned and what would be eligible for such financing. I cannot say anything more on that at this stage. We have been convinced since the very beginning that transparency has its virtue and that it is good that the market, European investors and savers and all market participants can see what the results of those tests are. Therefore on the contrary, we think that it is confidence-building.

As regards your second point, I already mentioned the European Council’s important decision to publish the results at the level of individual commercial banks and not at the level of macro tests only. The details of that are in the hands of CEBS and will of course be made public in due time.

Question: First on market interest rates: You didn’t really say very much in your first answer. Should markets therefore assume that interest rates are now at a point where they will start returning back up towards the 1% level or are you still imagining them remaining at quite a gap?

Second on the stress test: There still seems to be quite a lot of confusion about exactly what scenarios will be tested with regard to sovereign debt. As you have said, the ECB has proposed the scenarios against which the banks will be tested. Can you tell us what the ECB has recommended in terms of sovereign debt? What scenarios should the banks be tested against?

Trichet: On your first point, it would be a complete mistake to interpret what we are observing on the market as a monetary policy signal. It is not the case at all. As far as we understand, it is the consequence of the decision of the banks themselves at the moment of the renewal of their previous financing to ask for less than they could have done. The new supplies of liquidity that I have mentioned, the three-month operation and the main refinancing operation, were unlimited. So the banks would have got any amount of liquidity they asked for. We had absolutely no intention ourselves; we are observing that with great care and attention. No monetary policy signal!

On the second point, I would stick, with the agreement of the Vice-President, to what has been made public until now. The macroeconomic scenarios include a set of key macroeconomic variables differentiated for the EU Member States, the rest of the EEA countries and the United States. The exercise also envisages adverse conditions in financial markets and a shock on interest rates to capture an increase in risk premia linked to deterioration in the EU government bond markets. This will all be made public at the appropriate time. At this stage we have nothing to add.

Question: First on the stress tests: Can you confirm or deny the reports in the media today that the conditions include a depreciation of 17% for Greek bonds and 3% for Spanish bonds? And if this is true, is this not too mild for the stress test?

My second question is a broader one. Yesterday in Berlin, there was a press conference by the four famous professors who have brought the constitutional challenge against the financial bail-out of Greece. They have now expanded their challenge to the whole financial safety net. You can no longer ignore their propositions because opinion polls in Germany say that the majority of the population support them. And if you read the text, it is full of arguments which, from a constitutional law perspective, make a lot of sense. Do you think that these initiatives are sticking to old concepts of law – constitutional law – and that we have now new forms of international law which these people do not want to take into account?.

Trichet: On your second point, I have no particular comment. These are procedures that are ongoing and I will not comment on them. You know our position. And what has been done by the executive branches and the other institutions, is legal and correct and appropriate, in the circumstances. We expressed our opinion publicly on that because we were asked to make a statement by the various governments concerned.

On your first point, I have nothing to add to what I have said before.

Question: First, do you think governments should commit to filling any possible capital holes if banks do not pass the stress test?

And second, the IMF said today that markets are not yet convinced of the ECB’s commitment to scaling up bond purchases if this is necessary to prevent a further deterioration of market functioning? What is your opinion on that?

Trichet: On the first point, let me just repeat what I have already said. Where necessary, to address this challenge, banks should retain earnings, turn to the market to strengthen further their capital basis or take full advantage of government support measures for recapitalisation.

On the second point, my own observation is that the market sees what has been done by governments and what is new and was not incorporated in the previous reaction of some market participants, but was carried out by the European executive branches as mentioned in the previous question. Market participants see what we ourselves have done. There are elements that are justifying the tendency for these secondary markets to function better. But again I remain cautious and prudent. We will continue to monitor the situation very closely.

Question: I would like to go back to the stress tests, if I may, for the first question. The consensus view in the market that seems to be emerging from the details that they have so far is that the stress tests are not going to be robust enough to restore confidence in the European banking system, so what do they need to be?

Trichet: For all other questions on the stress tests – we will not say anything more than what we have already said and what has been made public by the authorities. For further information, you will have to wait until 23 July, when you will have the stress tests, the assumptions and the results. Then you will make your judgment and, of course, we expect that all observers will have an opinion on this.

Question: My second question – if you are not going to quite get round to answering the concerns that the market appears to have right now about what it is they think they have got – is related to the bond purchase programme and the sterilisation of it so far. Are you satisfied with the progress given the blips that there have been in the amounts that you have had on deposit, the shortfalls, the excesses, etc., and how do you intend to smooth that out over time, particularly as the purchases become greater in aggregate?

Trichet: As I already said, it was not necessarily surprising that the tender you are referring to was a little bit difficult because we were withdrawing, not €51 billion as originally planned, but €199 billion all in one go. It was an enormous withdrawal of liquidity. I was satisfied that the last operation functioned correctly, given the enormous scale of the previous withdrawal. It is, of course, our intention to continue with the sterilisation, and this is being done through the appropriate means. And we will take the appropriate decisions to continue to sterilise these interventions.

Question: Mr Trichet, did the Governing Council discuss introducing additional longer-term refinancing operations during this month’s meeting?

And my second question is: the Bank for International Settlements has proposed that official budget forecasts be prepared or verified by independent agencies. So, what role do you see for the ECB in this, if any?

Trichet: On the first point, as I have said, we have already decided to continue to proceed with the three-month operations to supply unlimited liquidity for a number of months to come. There was no new decision.

On the second question, I will not comment on the BIS remarks but, as you know, in our own proposal made to the Van Rompuy task force, we mentioned explicitly that we thought that it would be good to have an independent institution, preferably within the Commission, that would make an assessment and diagnosis of the fiscal situation of the various countries that are members of the EU and the euro area.

Question: You specifically mentioned your submission to the Van Rompuy task force. The German government, in its submission to the same task force, has suggested that there should be an orderly insolvency procedure introduced in the euro area. Is this something that you favour, are you against it or are you open to persuasion on that front?

Trichet: No. As you know, we did not mention that in our proposal, and I do not think it would be opportune.

Question: A question on your liquidity operations. You are pointing out that you are still supplying unlimited liquidity to the banks, but at the same time of course the time horizon is shortening, which means that the banks have less opportunity for carry-trade operations and to support the bond market in this way. So, are you concerned that this has negative feedback loops on the government bond markets in the euro area?

And, related to that, the second question would be whether you see a link between your securities programme and the full operationality of the stabilisation fund by the governments? If this thing really works, would this be for the ECB an opportunity to withdraw from its own programme?

Trichet: On your first question, as you remember we decided that both the six-month and the one-year operation would be phased out, and that the three-month operation would be made with variable rate tenders. We decided – taking into account the situation of the market and the overall environment of the banks – that it was appropriate to go back to the unlimited supply of liquidity for the three-month operation. At this stage, we consider that it is the appropriate way of taking into account, through non-standard measures, the situation as it is. We continue to observe the situation carefully, but for the present moment it seems to us appropriate. Don’t forget that we have to do what is necessary - exactly what is necessary, no more than what is necessary – in the circumstances. It was an important decision to reactivate this full allotment mode, at a time when we had started the exit for some of the non-conventional measures, particularly the three-month operation I have just mentioned.

On your second question, we will see exactly how the stabilisation fund is managed. I think it is very important that it exists, because it is a very powerful deterrent in terms of its volume. It is one of those important decisions that I would categorise as being completely unexpected ex-ante by observers, investors, savers and market participants. Now, it remains to be seen exactly how this stabilisation fund is used in practice. I would call for flexibility in the utilisation of the fund. I think it is something which would certainly be optimum, but it is not our decision, it is the decision of the governments concerned.

Question: Just going back to your previous comment that the ECB had a feeling that what’s needed in terms of the bond market interventions on your part is progressively diminishing. Could you just give a flavour as to what you are seeing that’s allowing you to make that assessment and what could happen going forward that would perhaps allow this diminishing trend to continue?

And a second question just on the economic outlook. There are signs that the US economy is perhaps slowing, that China may be slowing and, in an environment of budget deficit reduction in Europe, do you have any concerns that the European economy could fall back into recession?

Trichet: On your first question, I would say it’s an observation. You might remember the first settlement week we had to withdraw liquidity at a level of €16.5 billion, the second settlement week €10 billion, the third €8.5 billion and then we went down to €5.5 billion. For the last operation we had €4 billion. You will see what happens next Monday. It is something which looks like a trend, but we remain alert. We observe what is going on, and we are not surprised that the market is a little bit better because, as I have already said, decisions that are unexpected are progressively incorporated; they take a little time to be incorporated by market participants, investors and savers.

On your second question we remain cautious and prudent. We place great emphasis on the uncertainty which characterises the present period, not only at our level but also at a global level. You mentioned some observations in other big economies: you mentioned the United States, you mentioned China. Taking into account the fact that there is perhaps the feeling that the euro area in particular, and Europe in general, is in a less favourable situation, I would draw your attention to the following: the second quarter in the euro area is likely to be significantly better than the first quarter. That is something which has been confirmed by a variety of data, not only soft data but also hard data. The figures for industrial production, for industrial new orders, that we saw in the most recent monthly data were very good. I can see also that the most recent information – received even today – on an important economy of the euro area, namely Germany, on industrial output was also good. And I have noted myself that, in some observations made by financial institutions, the positive “surprises” regarding the euro area economy were important in comparison with certain other economies, where good results were expected but where the results, when made public, were a little less flattering. So, I see perhaps a tendency, not on our part – because we remain very cautious and very prudent – but outside the euro area, to be first excessively pessimistic about us, and to see that the figures we have do not confirm this pessimism. I am not changing in any respect the last forecast by our own staff, and the last IMF projections are in line with what we are saying. We are in a situation where a number of facts, figures and data do not confirm that we could have stagnation or a double-dip recession. It is not what we are observing at this stage. I could mention other figures, but I do not want to overburden you. You know the figures, and I have to say that part of the sentiment which is a little bit better might come from these facts that I have just mentioned.

Question: Just to follow up on two earlier questions, you said you were not surprised by the increase in market rates. Does that mean you consider it a welcome or an unwelcome increase?

And, second, you reiterated the point that in the stress tests banks should take advantage of the government funds that are available, but are you concerned that the governments may not make them available? And what would be the risk to the markets or outlook in that case?

Trichet: I have already responded to your first question. There is no interpretation in terms of monetary policy signal of what we have observed in the money market. I have given you the figures on what the banks themselves asked for. If the banks had asked for more, we would probably have a lower level of market rates. This is a phenomenon that is not signalling monetary policy intentions at this stage.

On your second point, we have mentioned what was, in the eyes of the Governing Council, the appropriate way to respond to a possible need to increase capital and, of course, we expect all parties concerned, including governments and public authorities, to take that into account when the stress tests are published.

Question: I have two questions. One is a rather theoretical question concerning the stress tests: if they had been carried out three years ago, maybe nobody would have stressed sovereign bonds or even sub-prime instruments in the balance sheets of banks, because they were the problems of tomorrow and nobody knew about them at that point in time. Are you happy with the criteria that were chosen? Because bankers say it is a bit strange with this test because this test of today will not test the problems of tomorrow.

And the second one, maybe to ease the atmosphere: on Sunday two countries of the euro area will try to win their first football world cup – this is good news. Given the fact that the winning country can hope for a boost to its domestic economy, do you have a secret favourite for this final, and was it an issue even in an informal form during the session of the Governing Council?

Trichet: I will take your second question first. I have said from time to time that one should not underestimate Europe. In soccer, in particular, it is quite impressive to see the number of European teams that were in the best sixteen and the best eight. In the best four there are three European teams – all from the euro area, by the way! No, I cannot say that I have any preference. I would only say may the best team win. I am sure that we will see a marvellous play, as we saw in the last match, which was also very beautiful. I have no opinion on the result of the match. The last match was a beautiful match and the two teams were very beautiful on the field – at least in the eyes of all those with whom I watched it yesterday evening. I am not a soccer enthusiast myself. Perhaps I am too impressed by the beauty of the play because I cannot really make pertinent comparison.

On your first question on the stress tests, I do not know whether, implicitly, the banks that are talking to you are suggesting that the stress tests should be much tougher – not only to stress test the risks that have already been identified, but all the very many risks that have not been identified. I do not think that is an appropriate way to characterise what we are doing. As has been done in the past on the other side of the Atlantic, in particular, we are trying to identify the risk themselves and to gain a proper understanding of extreme cases where there is severe deterioration in the situation.

Question: Now that the official covered bond buying programme has ended, do you think you could continue buying covered bonds through the SMP?

And the second question, you have promised to publish new collateral rules for private debt this month. Are we going to get them today or will that suspense continue?

Trichet: On the first question, we will not mix the two programmes; the two programmes are of a different nature. We explained very clearly what the purpose of the covered bond purchase programme was, which is totally different from the purpose we had in mind when we embarked on the Securities Markets Programme. So, we don’t confuse the two, not at all.

On your second question, what has been decided will be published in due course. As mentioned in our press release of 8 April the specific haircut schedules will be published in the course of July. But it is not something that we have examined today.