Oct. 13 (Bloomberg) -- European Central Bank President Jean-Claude Trichet said it’s now up to governments to solve Europe’s debt crisis as leaders get ready for a summit in Brussels in 10 days.
“It’s our duty to tell governments and other institutions what we see, but up to them to take the appropriate decisions,” Trichet, 68, said in an interview with Bloomberg Television in London today. “I’m certainly not underestimating the difficulty of their task.”
Policy makers earlier this month pushed back a debt-crisis summit to Oct. 23, as leaders are trying to solve a crisis that started in Greece two years ago and is now threatening to tip the global economy into recession. The ECB has shouldered the main burden of keeping Europe’s banking system from collapsing throughout that period, while pushing governments to take on more responsibility as leaders struggled to contain the turmoil.
“We see the big picture but it isn’t necessarily easy to see the big picture from any capital,” said Trichet, who will be replaced by Italy’s Mario Draghi next month when he retires.
Trichet and global leaders from the Group of 20 nations will meet in Paris tomorrow, ahead of the Brussels summit, which was initially scheduled for Oct. 18.
The Frankfurt-based central bank has resisted pressure to reverse two interest-rate increases this year and is opposed to suggestions that it should help boost the firepower of the region’s rescue fund, the European Financial Stability Facility, from 440 billion euros ($604 billion).
Trichet said that the role of the ECB is “to deliver price stability” and “pass on to the decision makers, either in Brussels or in all our democracies, what we see.”
German and French leaders pledged at a meeting Oct. 9 to devise a plan to recapitalize banks, help Greece and strengthen Europe’s economic governance. German Chancellor Angela Merkel, said earlier this month after meeting with French President Nicolas Sarkozy that Europe will do “everything necessary” to ensure that banks have enough capital.
The ECB said last week it will reintroduce longer-term bank loans and resume purchases of covered bonds, measures that Trichet said “were necessary to help restore a better transmission of our interest rates to the real economy.” While the euro currency remains “credible,” he said he would have “preferred to leave at a time which would have been quieter.”
“We have to remain very alert,” Trichet said on the region’s ongoing crisis. “A lot of events that are unpredictable can occur. We have to accept that it’s an ongoing structural transformation that we have under our eyes.”
--With assistance from Jana Randow and Matthew Brockett in Frankfurt. Editors: Simone Meier, Fergal O’Brien
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