Euro is 'stable and credible currency': Trichet

19th June 2011, Comments 0 comments

European Central Bank president Jean-Claude Trichet insisted the euro was a "stable and credible currency" in spite of the Greek debt crisis rocking the eurozone, in a speech Sunday.

As he accepted the Global Economy Prize by the Kiel Institute for the World Economy in northern Germany, Trichet said the ECB had managed to ensure price stability with average annual inflation of less than two percent for 12 years.

"We have thereby been safeguarding the euro's purchasing power," he said, according to a transcript of the speech provided by the ECB.

"This has been achieved despite several headwinds to the European economy: oil prices went up, the Internet bubble burst, violence and wars have raged in some parts of the world, and starting in mid-2007 we had to cope with the most severe global financial crisis in over 60 years."

He noted that the eurozone's overall yearly public finance deficit was at about 4.4 percent of GDP, about half that in the United States (10.8 percent) or in Japan (10.0 percent), according to the International Monetary Fund.

Trichet warned that after a tentative recovery in the wake of the crisis, imbalances between savings and investment in major global economies were starting to widen again, requiring stronger international monetary and financial cooperation.

"The euro area has a significant stake in effective global re-balancing, notably through sounder domestic policies worldwide which, in turn, would contribute to global external stability," he said.

"The global economy has a lot of homework to do if it is to address these challenges."

Europe's debt crisis, highlighted by fears of a Greek meltdown for a second time in just over a year, has heightened concerns about the future for the euro common currency, used by 17 countries.

Eurozone finance ministers were to gather in Luxembourg later Sunday to discuss plans for a new, lasting rescue package for Athens and how taxpayers and the private sector should share the burden.

© 2011 AFP

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