Will Greece bring down the euro?
European Central Bank President Jean-Claude Trichet says the fiscal crisis in Greece and other countries will not shake the common currency.
"The euro is a stable and reliable currency," stated the president of the European Central Bank, Jean-Claude Trichet, on Sunday. Upon receiving the Global Economy Prize from the Kiel Institute for World Economy in Germany, the ECB president praised the price stability common to the single currency, saying that the ECB has worked hard to keep the inflation rate within its established target of close to 2% over the past 12 years.
Trichet's comments come as eurozone finance ministers are discussing a second aid package for Greece in Luxembourg to prevent the country from defaulting. "In this way, we will be safeguarding the purchasing power of the euro," Trichet stated.
The monetary authority said the ECB will continue to do what is necessary to maintain price stability in the region and that this is not a time for "complacency".
Trichet also commented that after a partial reduction induced by the crisis, global imbalances are beginning to widen again. "The eurozone is a significant player in global rebalancing, mainly due to its largely healthy domestic policies," but added that the high level of unemployment in the region is unacceptable.
The ECB president stated that while the eurozone central bank is responsible for monetary policy, it is not responsible for economic policy. "The governance of the economic union is insufficient," both in the fiscal area and in monitoring competitiveness, the monetary authority explained.
Despite discussions about the challenges facing the eurozone, Trichet was keen to point out that the region's public deficit is currently about half that of the US or Japan.