Trichet and Juncker on recovery prospects and financial supervision

Pressmeddelande   •   Apr 01, 2009 14:49 CEST

Recovery in 2010 will happen if the policy decisions already taken are implemented "as rapidly as possible", said the European Central Bank President Jean-Claude Trichet on Monday, answering questions from the Economic and Monetary Affairs committee. On Tuesday, the committee heard from Eurogroup chair Jean-Claude Juncker, who warned the effects of the crisis would be felt for some time, even if growth returns next year. During the regular dialogue between the committee and ECB President on Monday, Mr Trichet said recovery in 2010 will happen only if the right decisions agreed so far at international level are implemented correctly and in good time.

What role for the Central Bank in financial supervision?

In his introductory remarks, Mr Trichet recalled that the European Parliament had called, last autumn, for more involvement of the European Central Bank (ECB) and the European System of Central Banks in the supervision of financial markets.

The same proposal was then put forward few weeks ago in the report by the high-level group chaired by Jacques de Larosière, which proposes setting up a European Systemic Risk Council. He said: "the fact that the Systemic Risk Council would be set up under the auspices of the ECB and the ESCB would allow it to benefit from the analytical capabilities and technical infrastructures developed by central banks in its analysis of monetary and financial stability."

"In this context, the Systemic Risk Council will have to rely on a wide range of macro- and micro-prudential data. This implies that the ECB and the ESCB should have access to the relevant micro-prudential information from supervisors", he added.

"Growth in 2010 depends on us"

Elisa Ferreira (PES, PT) asked: "Is it possible to revitalise financial markets, with banks starting to lend again, before real economy recovers?" She added: "What is recovery plan's goal? Jobs?"

"The goal is to have both growth and jobs", explained Mr Trichet. What is key to ensure recovery, the ECB President added, is "doing what has been decided, as rapidly as possible". "Growth in 2010 depends on us" he said.

Coherence between short and long term objectives

Gunnar Hökmark (EPP-ED, SW) asked about the consequences of the current increase in public spending to face the financial and economic crisis.

"If we lose the medium and long term path, then we are not (...) reinforcing confidence", said the ECB President. Therefore, there should be no contradiction between short and medium-long term elements in fiscal policy: "both are very important", he added.

G20 and regulation of financial products

Wolf Klinz (ALDE, DE) wondered whether, on the eve of the G20 meeting, the US and EU objectives were the same. Particularly, he asked on the regulation of financial markets products, where the EU aims at a comprehensive framework for all available products, while it seems the US would focus on those of "systemic relevance".

The ECB President replied that he is confident that both powers have the same goals in mind. "I expect the unity of all participants (...) on actions and reforms" to be implemented, he said. "We need global diagnosis and global decisions", he added.

Juncker on risks of crisis, 'Eurobonds' and recovery plans

"The economic situation in the euro zone keeps on deteriorating", said Jean Claude Juncker, chair of the Eurogroup. He added that in 2010 and 2011 recovery will start, but "we will have to deal with the consequences (of the crisis) for a while". In a discussion with the committee on Tuesday, Mr Juncker was asked about topics including default risks for euro zone countries, introduction of Eurobonds and stimulus measures.

No risk of default for any Member State

On the possibility of default for a Member State of the Euro zone or of a country reintroducing its national currency, Mr Juncker said: "it is a risk that does not exist".

Eurobonds: their day will come

Questioned on the opportunity to use ‘Eurobonds' to finance the response to the crisis, the Eurogroup chair said: "keenness of governments on such an instrument is not exactly overwhelming", but "I am convinced there will be a day when we have such an instrument, in the medium term".

No need for additional recovery measures

Replying to questions on whether current decisions on national recovery plans are sufficient to face the fall in private demand, Mr Juncker said: "The Council decided there no justification to increase recovery plan volume", and added: "Let's wait and see" and "in 2010 we will take (...) necessary decisions", he concluded.

30/03/2009 In the chair : Pervenche Berès (PES, FR) REF. : 20090330IPR52884


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