Introductory statement with Q&A

Jean-Claude Trichet, President of the ECB,Vítor Constâncio, Vice-President of the ECBFrankfurt am Main, 7 October 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.

Based on its regular economic and monetary analyses, the Governing Council continues to view the current key ECB interest rates as appropriate. It therefore decided to leave them unchanged. Considering all the new information and analyses which have become available since our meeting on 2 September 2010, we continue to expect price developments to remain moderate over the policy-relevant medium-term horizon. Recent economic data are consistent with our expectation that the recovery should proceed at a moderate pace in the second half of this year, with the underlying momentum remaining positive. At the same time, uncertainty is still prevailing. Our monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth. 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.

Overall, the current monetary policy stance remains accommodative. The stance, the provision of liquidity and the allotment modes will be adjusted as appropriate, taking into account the fact that all the non-standard measures taken during the period of acute financial market tensions are fully consistent with our mandate and, by construction, temporary in nature. 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 real GDP grew strongly on a quarterly basis, increasing by 1.0% in the second quarter of 2010, supported mainly by domestic demand, but partly reflecting temporary factors. Recent statistical releases and survey evidence generally confirm our expectation of a moderation in the second half of this year in the euro area and elsewhere. Nevertheless, the positive underlying momentum of the recovery in the euro area remains in place. The global recovery is expected to go on, and this should imply a continued positive impact on the demand for euro area exports. At the same time, private sector domestic demand should gradually strengthen further, supported by the accommodative monetary policy stance and the measures adopted to restore the functioning of the financial system. However, the recovery in activity is expected to be dampened by the process of balance sheet adjustment in various sectors.

In the Governing Council’s assessment, the risks to this economic outlook are slightly tilted to the downside, with uncertainty still prevailing. On the one hand, global trade may continue to grow more rapidly than expected, thereby supporting euro area exports. On the other hand, concerns remain relating to the emergence of renewed tensions in financial markets. In addition, downside risks relate to renewed increases in oil and other commodity prices, and protectionist pressures, as well as the possibility of a disorderly correction of global imbalances.

With regard to price developments, euro area annual HICP inflation was 1.8% in September, according to Eurostat’s flash estimate, compared with 1.6% in August. The increase in inflation was anticipated and reflects base effects mainly stemming from the energy component. In the next few months HICP inflation rates will hover around current levels before moderating again in the course of next year. Overall, in 2011 inflation rates should 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 slightly tilted to the upside. They relate, in particular, to the evolution of energy and non-oil 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.

Turning to the monetary analysis, the annual growth rate of M3 rose to 1.1% in August 2010, from 0.2% in July. The annual growth rate of loans to the private sector also rose, standing at 1.2%, after 0.8% in the previous month. In both cases, the rise reflects relatively strong monthly flows. The still low growth rates continue to support the assessment that the underlying pace of monetary expansion is moderate and that inflationary pressures over the medium term are contained.

The yield curve has remained fairly steep, but the downward impact of this on monetary growth is gradually waning. Moreover, while spreads between different short-term interest rates are still generally narrow, they have been widening somewhat between rates paid on short-term time deposits and overnight deposits. As a result, the annual growth rate of M1 has continued to moderate from high levels, and stood at 7.7% in August 2010, while the annual growth rate of other short-term deposits has become less negative.

The rise in the annual growth rate of bank loans to the non-financial private sector reflects both a further slight increase in the positive growth of loans to households and a gradually less negative annual growth rate in loans to non-financial corporations. The latest developments are consistent with the lagged response of loan developments to economic activity over the business cycle that was also observed in past cycles.

Banks have gradually increased the overall size of their balance sheets recently, but the challenge remains for banks to expand the availability of credit to the non-financial sector when demand picks up further. 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.

To sum up, the current key ECB interest rates remain appropriate. We therefore decided to leave them unchanged. Considering all the new information and analyses which have become available since our meeting on 2 September 2010, we continue to expect price developments to remain moderate over the policy-relevant medium-term horizon. Recent economic data are consistent with our expectation that the recovery should proceed at a moderate pace in the second half of this year, with the underlying momentum remaining positive. At the same time, uncertainty is still prevailing. 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. 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.

Turning to fiscal policies, we take note of the recent announcements made in some euro area countries with regard to measures to tackle the existing fiscal imbalances. Indeed, a number of countries have to meet major challenges, and immediate, ambitious and convincing corrective action is required. Credible multi-year consolidation plans are needed and will strengthen public confidence in the capacity of governments to return to sustainable public finances, reduce risk premia in interest rates and thus support sustainable growth over the medium term. For all euro area countries, the 2011 budgets need to reflect the commitment to ambitious fiscal consolidation in line with countries’ pledges under the excessive deficit procedures. Any positive fiscal developments that may emerge, reflecting factors such as a more favourable than expected environment, should be exploited to make faster progress with fiscal consolidation.

The urgent implementation of far-reaching structural reforms is essential to enhance the prospects for higher sustainable growth. Major reforms are particularly needed in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. The removal of labour market rigidities and the strengthening of productivity growth would further support the adjustment process of these economies. Increasing product market competition, particularly in the services sectors, would also facilitate industrial restructuring and encourage innovation and the adoption of new technologies.

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

* * *

Question: A number of ECB policy-makers have expressed concerns that a number of euro area banks are addicted to central bank liquidity, which is preventing you from proceeding with your exit strategy. So, I was just wondering how you will deal with this problem or how the national authorities should deal with this problem?

And my second question relates to the fact that credit conditions in the euro area have tightened quite considerably as a result of the appreciation of the euro against the dollar and the increase in money market rates. Are you comfortable with that, given the lack of inflationary pressures? And in relation to that, do you see a risk of a global currency war?

Trichet: With regard to your question on banks: when a number of our previous refinancing operations matured, we observed that banks were asking for less refinancing than they had asked before. As you know, we are still following the mode of supplying liquidity with full allotment at fixed rate on one-week, one-month and three-month durations. The fact that we have observed a €79 billion euro reduction in demand for liquidity has, in our opinion, been interpreted correctly by the market as proof of progressive normalisation. It was the banks themselves who decided that they needed less liquidity than before, and this has had an impact on money market interest rates. This was not something that we engineered ourselves and there is absolutely no monetary policy signal in this market move. Rather, it was a decision taken by euro area commercial banks in an environment where liquidity is still available through operations with full allotment. As regards the issue of banks being addicted to central bank liquidity, I do not want to attach too much significance to the fact that there has been a €79 billion reduction in demand for liquidity. In a number of cases, we still need to ask the appropriate decision-makers to do what is necessary, because it is not a normal situation to have a number of institutions still very much in need of refinancing. As you know we call upon all banks to continue to take all appropriate measures to reinforce their balance sheet as well as their capital base and adhere to the decisions taken. Furthermore, when and where needed they can, and must, ask the public authorities, which have already committed themselves to providing appropriate capital support, to activate this support.

As regards the issue of exchange rates, I would stress that, more than ever, exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability, which is something we will be able to exchange views on with the authorities - central bank governors and ministers of finance - of the major floating currencies in Washington over the next few days.

Question: What will be your message?

Trichet: My message will be the same as my answer to your question: excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. And, as you have heard me say on a number of occasions, I have always shared the view of the US authorities that a strong dollar is in the interests of the United States.

Question: First of all, I want to address the issue of Greece. If it proves that Greece has a greater deficit than we thought, would you believe that extra measures have to be taken by the Greek Government to approach the subject? That is the first one.

Second, the German newspapers write very often that a very strong euro makes a weaker Europe. Do you believe that? And do you believe that Europe should cooperate financially with China, that our alliance should be with China at that moment?

Trichet: First of all, what is extremely important – not for Greece in particular but for all countries – is to give full substantiation and credibility to the targets that have been decided upon and approved in order to ensure that observers, economic agents, investors and savers see that the fiscal adjustment programmes in the country concerned are on track and fully confirmed by the appropriate measures. That is the response to your first question.

As regards your second question I do not know which German paper you are reading – there are a large number of German journalists present now – but I have not read that. On exchange rates, I have already said all that I have to say as regards the relationship between the major floating currencies. As regards China, we have had an important discussion at the level of the euro area, and at the level of Europe as a whole, with the Chinese Government. I was in Brussels with the other members of the so-called euro area troika and we met with the Chinese authorities. I said then that it is very important that the exchange rate policy reform announced by China on 19 June this year is implemented. The flexibility offered by this new policy framework is important and would allow an orderly and gradual appreciation of the Renminbi in effective terms. This decision of 19 June has been reaffirmed by the Chinese Government, and we believe this will be positive for growth in China and for balanced growth at a global level.

Question: Are you satisfied by the attempted structural reforms in Greece given the big lack of competitiveness? Do you think there is more to be done on labour and pension reforms?

Second, might you ever think of prolonging the stability programme for Greece if the conditions in the markets are not very favourable at the end of the programme?

Trichet: Can I take the opportunity of this further question on a particular country to reiterate the fact that the Governing Council of the ECB is responsible for the currency of 330 million people at present, and the figure will rise to more than 330 million people as early as next January when the seventeenth country joins the euro area. All my colleagues, the Vice-President and myself have to determine what is necessary to deliver price stability to 330 million people in the medium term. It is what we do. Over the first 11½ years we have delivered average annual inflation rate of 1.97% – less than 2%, but close to 2%. All the information from financial markets as well as from various panels and surveys confirms that, for the next five or ten years, they are also projecting inflation in line with our definition of price stability. 11½ years behind us, 5-10 years ahead of us: this is a very impressive period of time. We have delivered to our 330 million fellow citizens the best result that has been observed for 50 years in the countries of the euro area. I say that with emphasis because it is the mandate that we have received from our fellow citizens and from our democracies. We have a primary mandate and we fulfil this primary mandate at the level of an entire continent – which is comparable to the size of the United States – with 330 million people.

At the level of individual countries and economies of the euro area, responsibilities lie with the various capitals. And we call upon all capitals to ensure that they pursue a convincing path towards fiscal sustainability. We have always said that and we continue to say it with great determination and force. It is our main message. We also say that appropriate structural reforms are of the essence and when losses in competitiveness are registered, they have to be corrected. This is not a new message – it is a message that the ECB constantly conveys through all possible channels, including, of course, directly to Ministers of Finance when the Vice-President and I participate in the Eurogroup meetings.

Question: Greece is opting out of the European Financial Stability Fund from the beginning, according to the Framework Agreement. The EFSF was given AAA rating last month, and you said that we now have a big deterrent. Reading the Framework Agreement, I question this because, if I understand correctly, Chapter 8 Paragraph 2 of the Framework Agreement clearly states that, when members opt out – when they apply for guarantees – their quota is filled by the other guarantors. I checked with an English native speaker whether I had understood this correctly. Can you confirm that this is the case?

Secondly, in the first nine months of this year bank investments in high-risk, junk bonds have increased by a whopping 55%. Are you not disturbed by this when you say that you confirm the unlimited liquidity allotment? Are you not disturbed by the fact that banks are making more high-risk investments than in previous years? Do you have any ideas or plans of how to change this?

Thirdly, have you changed your mind on Glass-Steagall?

Trichet: First of all, you might remember that Greece benefited from extraordinary aid from the other countries and is already activating extraordinary aid. So I am a little bit surprised by what you say. It is true that a country benefiting from the Stabilisation Fund would not contribute to it at the same time. But, again, Greece is in a different situation from that standpoint because it is already benefiting from another extraordinary financing.

On the second question, we and supervisors in all countries are calling on all banks to be extremely attentive to their risk management. This is, of course, absolutely of the essence not just at the present time, but at all times. As regards our full allotment mode, which, as you know and as I have said, is a non-standard measure that still exists, I would only say the following. In our understanding of the overall assessment of the functioning of markets at the level of the euro area as a whole and taking into account the fact that the market has not been functioning correctly until now at least, we still consider it necessary to have this non-standard way. It is designed in particular to permit the monetary policy transmission channel to function as well as possible. When we are analysing the situation, we have, on the one hand, our interest rate and standard measures that are there to ensure price stability in the medium term. We were credible in the past, we have delivered, we have a track record and we are credible for the future. And the main aim of the non-standard measures is to help establish, re-establish or restore more appropriate functioning of the monetary policy transmission mechanism, taking into account the fact that part of the market is not functioning normally.

On Glass-Steagall, I have no particular comment to make. But I remember mentioning here, responding to the same question, that we were not necessarily in the same universe in Europe in comparison with the United States of America, and, at this stage, I will not say that the model of universal banking is to be abandoned in Europe.

Question: Firstly, we have no explicit reference in the Statement to exit strategy. Instead, we have this sentence that “the stance, the provision of liquidity and the allotment modes will be adjusted as appropriate, taking into account the fact that all the non-standard measures taken during the period of acute financial market tensions are fully consistent with our mandate”, and so on, which seems to me so tortured that it suggests that there was quite a lot of discussion on this point within the Governing Council today. Could you give us a flavour of what the thinking is at the moment on the timing and the pace of your exit strategy; whether we are still on the same path as we were, say, a month ago and, particularly, what is the appropriate response of the ECB at a time when other central banks are either indirectly, by considering further quantitative easing, driving their currencies low or directly intervening in currency markets?

And my second question is that, when you were listing the possible risks – downside risks – to growth, you have dropped this time the reference to uncertainty about growth prospects in other advanced economies, which seems a bit strange because that seems to be arguably the biggest risk at the moment. Perhaps you could you explain why it is not there and what your thinking is on that point.

Trichet: First of all, you might have seen that we have embarked on an exercise of concision, because we had observed that, after a certain period of time, the ‘literary exercise’ of the Introductory Statement resulted in longer texts. So you have a more concise text. But concision does not mean that we are changing our assessment. And, particularly on your first question, I would say that the wording that you see in this Introductory Statement is the merger of sentences that were in the previous assessments. So we did not change our assessment on the non-standard measures, the allotment mode, the provision of liquidity at all, and we are exactly in the same mood as we were a month ago. There is no change in our own attitude, and we will, as we said last month and continue to say this month, continue to monitor all developments over the period ahead very closely. Again, all depends on the situation we see on our own market and whether or not we judge that it is appropriate to continue to help restore the more appropriate functioning of our monetary policy transmission channel. That is in response to your question on exit strategy.

As regards your second question on the overall assessment of the situation, frankly, we have not changed our views. The present situation is obviously better than expected, that is clear. It has been confirmed by all the international institutions, and the IMF itself is revising growth in Europe upwards. It is a pure observation of reality, as it has been observed in the second quarter in particular. But we are not declaring victory. We are not saying that we are in a mode of active and rapid growth. We consider that we have to remain very cautious and very prudent. We do not consider that, for instance, the profile of growth next year has changed. We said this month, as we said a month ago, that we saw the growth projections being tilted slightly on the downside. When we address the global economy, we do, of course, incorporate the biggest economy in the world, and I do not think there is any message that we wanted to convey to qualify differently what could happen in the United States of America. We have no particular comment on the United States. I am very anxious to hear Tim Geithner and Ben Bernanke when we are in Washington, for a few days. Let me only say that, in assessing the situation, we have to be very careful to always remain cautious and prudent. There is a tendency for observers to amplify. So, when you have good news, you have a media, a communication tendency to say “well, it’s fantastic; it’s a very important, buoyant growth”. But when we had good news in the second quarter, we never said ourselves that “we are now in a mode of buoyant growth”. We were prudent and cautious. And the same goes for news that is much less flattering. It is a mistake to immediately interpret it as signalling some kind of medium-term drama. Volatility is part of the world as it functions, and we have to continue to have a sense of direction and a sense of the medium or medium to long-term perspective, which is never as good or as bad as the immediate judgment might suggest. So, again, we are keeping our composure permanently. We are on a modest growth path. We are not declaring victory. We have to permanently be very alert.

Question: Just, first, again on the last point you stressed: of course, the media amplifying. But first the term “currency war” came from the finance minister of Brazil, Mr Mantega, and then Dominique Strauss-Kahn referred to this as well, so the media took it over. And this is my question now: how to best tackle global imbalances at the moment? Also, what role should monetary and exchange rate policy play there? Because this might be the big topic at the meetings in Washington right now.

And my second question in relation to that would be: what are your ideas on an optimal international currency order in the future and what role should the G20 play in your view?

Trichet: It has always been reaffirmed by the G20, as well as other “G” communiqués and messages from central banks, that the solid anchoring of inflation expectations in line with price stability is a major contribution to sustained, non-inflationary growth. It is true for the advanced economies as well as for the emerging economies, on which we are counting very much to help the global economy to deliver this sustained, non-inflationary growth. The inflationary tensions in a number of economies worldwide justify policy interest rate moves. As regards our own judgement, I was very clear on the fact that we consider our present monetary policy stance as appropriate and we have fully confirmed our interest rates. As regards exchange rates, I have already responded to the question. On the one hand, excessive volatility in the exchange rates of the major free-floating currencies has adverse implications. On the other hand, we are having discussions with a number of emerging market countries, including China.

On your last question I would only say that we have to distinguish very clearly the present situation. I mentioned to what extent I considered that in the present situation it was important that the US authorities – the Chairman of the Federal Reserve and the Secretary of the Treasury – say that a strong dollar is in the interests of the United States. We have in the medium to long term another issue, which is associated with the structural transformation of the world and with the fact that some currencies that are today not fully convertible or free-floating will become one day fully convertible. That of course calls for reflection on the long-term perspective of structural change in the constellation of major currencies in the world. I’m speaking, of course, about the Chinese currency, but not only about the Chinese currency – about a number of other currencies of remarkable economies of emerging market countries that are developing very rapidly.

Question: Mr President, you often underscore the importance of countries of the euro zone to enact and implement structural reforms. You are aware that in France next week, there will be a general strike launched by some trade unions. You know the strong opposition, what effects that can lead to – like in the year 1995. So, what could be your message, in general of course, and maybe to the French government due to its strongly applied policy: I mean, it is, of course, the reform of retirement schemes that is the question, and you will maybe give a message to the government on this topic?

Trichet: I have a very simple comment on that. When we look at the long-term perspective of all advanced economies in the world – not only those in Europe – it is absolutely clear that the management of pensions, and of the retirement age and so forth, is absolutely key. We have to deal with a very welcome lengthening of the duration of our own lives. It is something that is continuing very impressively. Year after year, depending on the various countries involved, we are gaining several – more or fewer – months of life expectancy. We have to take the appropriate structural reforms necessary to take that into account. This is never easy. I experienced that myself in this institution when we had to reform our pension arrangements. It is always difficult, but we have to understand that this is absolutely necessary.

Question: You made an implicit reference to Ireland in your introductory statement. Two questions arise in the context of the current debate in Irish politics. The first is whether there should be a voluntary renegotiation of senior bank debt issued by the nationalised Irish banks. What considerations would arise in that particular debate?

Second, is it feasible for the Irish authorities to climb the mountain they have ahead of them without looking at corporation tax? There seems to be a view in Brussels that it is going to be very difficult to achieve what needs to be achieved without doing that.

Trichet: On the first question: it is a question that has to be addressed to the Irish government. I have no particular comment to make myself.

On the second question, I would say that it is extremely important that the Irish Government takes all appropriate decisions that would facilitate the credible path towards the sustainability of public finances. As you know, there has been a very important declaration by the Irish Government in this respect that has recently been made public. There are deadlines mentioned by the Irish Government, and we consider it to be absolutely essential that the commitment undertaken is converted into appropriate action. I will not comment on any particular measure. I have no position of the Governing Council to present, but the goal is absolutely clear.

Question: Two questions: First, why did you increase your purchases of government bonds last week?

And the second question: Is there any talk within the ECB about possibly changing collateral rules to try to encourage those banks relying very heavily on the ECB to find other sources of funding?

Trichet: On the first point, let me just say that we decided to implement this programme several months ago. The aim of the programme, as I have already said several times, is to help the monetary policy transmission mechanism to function as correctly as possible.

On the second question, we are permanently reviewing our policy, so I have no particular comment on that point.

Question: In light of the positive data coming from Germany, do you think there is a widening gap between Germany and the rest of the euro zone? And will Germany be walking alone in the future or do you expect the other members to come along?

Trichet: I think that when Germany – being the first ‘client’ of many, if not all, members of the euro area – is growing above average it is very good for Germany and for the euro area as a whole As you know, Germany, during the first nine or ten years of the euro, had to regain the level of competitiveness that it had lost because of the impact of reunification. So, Germany has had a long period of catching-up, with growth in real terms that was not buoyant at all, when at the same time other countries had very rapid growth. Now, it is the reverse. It is natural, in a wide economy such as ours, with 16 countries and 330 million people, that you have fluctuations and cycles corresponding to an idiosyncratic situation. Germany was the only country that had to cope with reunification, so it is not abnormal that, for a while, Germany was growing less rapidly than the average of the euro area and a number of other countries. Conversely, at a certain moment, it started to grow more rapidly. Furthermore, Germany, because of its international position, was also touched, perhaps more than others, by the collapse of the global economy. So, putting all this together, I am very happy with Germany’s new buoyancy. It is good for Germany and it is good for the euro area as a whole. And I do not see any particular problem at this stage with the good surprise that we have in the German economy.

Question: You said that you have not changed your evaluation as far as the unconventional measures are concerned. I would like to know if this means that you are sticking to previous statements that the ECB is gradually phasing out unconventional measures.

Trichet: Yes. You could see precisely this progressive phasing-out taking place over the last few days. In interrupting the six-month operations and the twelve-month operations, we observed the impact on liquidity demand and also the interaction with the market. But again, I confirm that there was absolutely no policy signalling in what we have observed, we are still in a mode of full allotment. We are delivering all the liquidity that is requested by our commercial banks.

Question: You said that your mood on the exit strategy, as you just reiterated, is unchanged from last month. Was that position supported unanimously within the Council today?

Trichet: I would say that in the Governing Council, as is normal in such matters, each brain has a right half and a left half: we all assess the pros and cons of the situation. We do not in any way challenge the fact that we need the non-standard measures at the moment. So there is a consensus on that. We will have to make a judgement and decide what the new mode will be sufficiently far in advance. I draw again your attention to the following: we consider that the non-standard measures and the standard measures must not be confused. The standard measures are there to deliver price stability in the medium term in line with our definition. The non-standard measures have to be commensurate with the functioning of the markets: if we have disruption here, or and anomaly in the functioning of some markets there, we have to cope with it to get a more normal transmission of our monetary policy impulses.

Question: What is your assessment of the Greek problem so far, and are you worried that with people being against it, it might be derailed?

Trichet: We are living in democracies, very fortunately, all over Europe. I would only say that the programme which has been decided and has to be implemented fully in line with previous commitment is extremely important for Greece, for the Greek economy, for Greek medium-term growth. What is being implemented in Greece today seems to us absolutely of the essence and, in our opinion, has to be executed in a very attentive fashion.

Question: Mr Trichet, yesterday after the decision of the Bank of Japan, there were a few takes in some of the agencies saying: “do not expect too much from Mr Trichet tomorrow because the actions of central banks only work if they are concerted actions. So, after the steps of the Japanese central bank, the ECB and the FED are working on something and they will come out with it in a few days, saying that they are all buying papers in the market going further down, if possible, with the interest rates to stabilise the markets”. Now, what are you up to in Washington? Are you planning any concerted actions or is that just a story by the agencies?

Trichet: If we were, I wouldn’t tell you. But, in any case I have no comment. I never comment on such matters. It is an absolute and constant policy that we pursue. Let me only say that we will have a discussion, as I have already said, on the exchange market – because your question was not on monetary policy but on the exchange market, if I understood correctly. I have already said all that I had to say at the present moment on the exchange market.

Question: I just have an additional question, because you were speaking of the programme which is extremely important for Greece. Just for Greece? Are you so sure that Ireland won’t ask for any help?

Trichet: No, I said it is important for all countries. Greece has a programme that has to be implemented rigorously. Portugal has recently made declarations which are, in our opinion, extremely important and have to be followed up. I have already responded about Ireland: we very much welcome the commitment by the government, which has to be turned into precise decisions and actions. So, it’s a universal recommendation, not addressed to any country in particular. I’m taking advantage of all the Greek questions, and perhaps also the Irish questions, to re-state that we are an institution that is responsible for price stability at the level of sixteen countries – and as of 1 January next year, seventeen countries – with the size comparable to the United States of America. We have to consider the continent as a whole and not merely one particular country.