Frankfurt: European Central Bank president
Jean-Claude Trichet said on Friday it was too soon to declare the
financial crisis over and that exceptional ECB credit support
measures would remain in place for now.
Speaking a day after the bank left its key interest rate
unchanged at a historic low of 1.0 per cent, Trichet addressed
the issue of "exit strategies," or when it would begin to
unwind extraordinary steps taken over the past two years.
It was "too soon to call the crisis over," he told
analysts gathered in Frankfurt, while also making clear that
at some point "financial institutions ultimately need to stand
on their own two feet."
The ECB has slashed interest rates, loaned unlimited
amounts of cash to banks for periods of up to one year and
launched a programme to buy low-risk corporate bonds to
unblock a key eurozone financial market.
Markets now want to know when the bank will begin to undo
its exceptional measures, but Trichet emphasised that "we will
unwind these measures when the situation returns to normal and
the rationale for the measures fades away."
The programme of what the ECB prefers to call "enhanced
credit support" has helped to buffer the eurozone from global
financial turmoil, but the 16-nation economy nonetheless fell
into recession for the first time since its creation in 1999.
After contracting by a modest 0.1 per cent in the second
quarter of this year however, the zone appears set to post
growth in the following three months.