ECB chief: Financial system must change

European Central Bank President Jean-Claude Trichet said on Friday that the financial markets are experiencing an “ongoing correction” and declined to put a timetable on when the crisis might abate.

“It’s an ongoing correction,” he told journalists of the European American Press Club in Paris. “We have to be very cautious in qualifying the duration.”

Trichet said the crisis is the first major test of the globalised economy and has showed that “everything must change”.

“The whole system has showed itself to be too fragile and not resistant enough,” he said.

“We have to construct, patiently and without a quick fix, a global market system” that is resistant to shocks and fluctuations, he said.

He warned against searching for a scapegoat because he said they are everywhere.

Market actors are having to reassess the quantity and price of risk in the system after “events considered impossible finally were possible”, he said.

Governments should beware of reckless spending, he said, calling for “wiser” macroeconomic policies in the medium and long term.

He said it’s a good thing that the European Commission put six nations—eurozone members Ireland, Greece, Spain, France and Malta plus non-euro member Latvia—on notice by monitoring their excessive deficits.

“The confidence of today rests both on the right measures being taken for today but also on the capacity of decision-makers to show that tomorrow and after tomorrow they will go back to a normal situation,” he said.

Trichet also said that euro zone governments have to run their own budget policies.

“I consider that it is extremely important that each government is fully responsible for its own policies, and of course for its own fiscal policies particularly.”—Sapa-AP

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