March 30, 2009 / 2:54 PM / 10 years ago

ECB's Trichet at European Parliament

BRUSSELS (Reuters) - The following are comments by European Central Bank President Jean-Claude Trichet during his testimony on Monday at an economic committee of the European Parliament.

On forecasts:

“All international institutions are reviewing economic forecasts.”

“We are clearly in a world which remains uncertain.”

“And then growth in 2010 depends on us. And it depends on our capacity to reintroduce confidence.”

Corporate bonds:

“On corporate bonds — we will see what we decide, and if and when we decide, we will go public.”

On policy implementation:

“We all have the same goal, the goal is to have growth and jobs. The questions is what do you do.”

“I don’t think it is justified to say we are doing less on this side of the Atlantic. We have automatic stabilizers.”

“The masterword is implementation, execution (of economic stimulus). We have to deliver now, and it’s true also for public spending.”

On forex, reserve currencies:

“I continue to refer to the agreed statement of the G7, which I signed, which on this extremely important issue says that we reaffirm our shared interest in a strong and stable international financial system, that excess volatility and disorderly moves in exchange rates have adverse implications for economic and financial stability. I stick to that, it is what has been signed by the governors, my friend Ben Bernanke and the other governors and the ministers that participated in this meeting.”

“I have noted with great, great interest that on the occasion of the last declaration, statements, Tim Geithner said a strong dollar was in America’s national interest and President Obama said ... there is no need for a global currency.”

“These are very, very important statements and I would not envisage anything else in the present circumstances, which are extraordinarily touchy and extraordinarily demanding.”

On implementing decisions:

“What is necessary now is not to pile up new decisions, new avenues, but to execute and implement what has been decided.”

On adopting euro:

“The adoption of the euro cannot be a substitute for the need of domestic policy adjustment.”

“And it is important to bear in mind that the premature adoption of the euro can make it more difficult for a country to cope with the challenges ahead.”

“Without sustainable convergence, the monetary policy stance of the ECB would be inappropriate for the country concerned.”

“In this case, the country in question could face the risk of excessive output and inflation volatility, as it would lack important tools to stabilize economic conditions at home.

“Thus, euro adoption cannot take place until major imbalances in the country have been eliminated and provided appropriate sustainable convergence has been achieved as required by the (EU) treaty.”

On price stability, liquidity:

“Overall, we expect price stability to be maintained over the medium term. We will continue to deliver on our mandate and ensure the firm anchoring of inflation expectations over longer-term horizons.”

“Let me recall that the ECB has adjusted its liquidity management framework in order to counter the dysfunctional nature of the euro area money market.”

“We have provided the euro banking system with unlimited liquidity support at fixed rates with maturities up to six months.”

On housing finance, central and eastern Europe:

“Housing finance in the euro area should be more resilient to shocks.”

“Some eastern and central European countries have been hit hard, thus highlighting previous vulnerabilities.”

“These weaknesses relate in particular to domestic and external imbalances, external and domestic debt positions.”

“However, it is very important to differentiate between various countries in the region.”

“A number of countries have shown a significant degree of resilience.”

“The crisis has highlighted the importance of avoiding macroeconomic imbalances.”

On economic outlook, inflation:

“Latest information suggests economic activity has deteriorated further in the first quarter of 2009. Looking ahead, we expect demand to remain very weak throughout 2009, both at the global level and in the euro area, before gradually recovering in the course of 2010. As in the case for inflation, this outlook remains surrounded by uncertainty.”

“Since my appearance before the European Parliament on January 21, the economic situation and outlook have weakened further.”

“Inflationary pressures have diminished further.”

“Looking ahead, we expect the inflation rate to remain well below 2 percent for this year and 2010.”

“The risks to this outlook are broadly balanced.”

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