Interview with Jean-Claude Trichet, President of the European Central Bank (ECB)[i], conducted by Beda Romano (Il Sole 24 Ore), on 31 August 2011, published 2 September 2011.
1. A compatriot of yours, Jacques Delors[ii], the former president of the European Commission, has said in recent days that the euro area is “on the brink of the abyss”. It’s a very pessimistic view, undoubtedly coloured by a sense of disappointment. Do you share it?
I have great admiration for Jacques Delors. But let me sum up some of my present observations. First, we have a credible single currency which over the last 12 years has kept its value in terms of price stability in a remarkable way in comparison with the previous national currencies in the last 50 years. The solidity of the currency itself is not disputed and our fellow citizens all over Europe are calling on us to continue preserving price stability. Second, the euro area, taken as a whole, is in a better position from a fiscal standpoint than other economies. In 2011, the public finance deficit of the euro area should be around 4.5% of GDP, while in the United States or Japan it will be about 10% of GDP. But we had a very serious weakness in terms of economic and fiscal governance inside the euro area which has been revealed by the global crisis.
2. Well-informed politicians are not hesitating to talk about a possible break-up of the euro area. The weaknesses cannot be denied.
The weaknesses have to be corrected. Loose fiscal policies and insufficient attention to competitive indicators have not been surveyed rigorously and corrected in time. Individually and collectively the European countries have to correct the present situation. Individually by adjusting their domestic policies – as all the advanced economies, including the US and Japan are called on to do – and collectively by considerably reinforcing their mutual surveillance and their governance.
Mr. Trichet is not pessimistic, like Mr. Delors; however, his diplomatic and prudent views are closely linked to reforms measures. He emphasizes that the euro zone needs to implement significant reforms, and adds that “even in normal times all our decisions are very difficult”, so nobody knows if this time, in exceptional circumstances, the euro zone will be able to take the relevant measures in time.
[ii] Jacques Delors was finance minister under the François Mitterrand government from 1981 to 1984 and was president of the European Commission from 1985 to 1994. Le Figaro described him as “the father of modern Europe”.