HIGHLIGHTS-ECB's Trichet, Rehn speak at European Parliament

BRUSSELS, March 25 (Reuters) - Following are comments by European Central Bank President Jean-Claude Trichet and European Monetary Affairs Commissioner Olli Rehn on Thursday at the European Parliament.

TRICHET ON ECONOMY

"We cannot say the difficult times are over -- we are not over the difficult times, we have to remain extremely alert."

TRICHET ON MONETARY POLICY

"Keeping these measures in place for longer risks changing the behaviour of financial market participants in an undesirable manner. We don't want to breed dependency..."

"The governing council is of the opinion that the current monetary policy stance is appropriate."

TRICHET ON ECONOMIC RECOVERY AND CHALLENGES

"An economic recovery is in progress but this does not mean that the crisis over. The pace of recovery will be uneven and we cannot rule out setbacks."

"We are still facing Europe's challenges regarding the reform of our financial system -- finance must play a constructive role and not a destructive one in our economy."

TRICHET ON COORDINATED ACTION

"It is more important than ever to recognise that a prosperous Union requires determined action by all members of the monetary union in Europe."

"It is within this context that I appreciate the commitment of euro area Member States, made on the occasion of the last European Council meeting, to take determined and coordinated action, if needed, to safeguard financial stability in the euro area."

"Let me also take advantage of my presence in front of the European Parliament to lay out what I already mentioned in the hearing before the Economic and Monetary Committee on Monday. It is the intention of the ECB's Governing Council to keep the minimum credit threshold in the collateral framework at investment grade level (BBB-) beyond the end of 2010."

"In parallel, we would introduce, as of January 2011, a graded haircut schedule, which will continue to adequately protect the Eurosystem."

"I will provide the technical details when reporting on the Governing Council decisions of our next meeting on 8 April."

REHN ON GREECE

"Greece is now on track to meet the four percent target of deficit reduction this year, following the bold measures that the Greek parliament decided on earlier this month.

"However, neither Greece nor the euro zone are completely out of the woods yet.

"Therefore the (European) Commission has strongly encouraged euro area member states to take a political decision on a mechanism to ensure financial stability in the euro area as a whole -- a mechanism which could be swiftly activated in the case of need in conformity with the treaty and its bailout clause and without any automaticity built in.

"On our side the Commission is ready to put in place a European framework for coordinated and conditional assistance which could be used if needed and requested.

"We are working closely and intensively with all euro area member states and the ECB in order to reach a solution this week in the context of the European council."

For full text of Trichet's speech: here