Jean-Claude Trichet: Recovery, reform and renewal – Europe’s economic challenge Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the conference “The ECB and Its Watchers” XII, Frankfurt am Main, 9 July 2010. *  *  *  Ladies and Gentlemen, It is a pleasure to be with you in this 12th edition of the ECB Watchers’ Conference. Today, I would like to consider where we are in the financial crisis and the economic recovery; to describe the emerging contours of the post-crisis order both in Europe and the wider world; and to reflect on what has been achieved by the global policy response to the crisis and what remains to be done. 1. Where do we currently stand in the crisis? We are now almost three years into the crisis. The development of the crisis was marked by a progressive collapse of confidence: a seizing up of markets, dramatic financial events impacting the global financial system, a sharp decline in trade and a freefall in economic activity in the industrial world. We can all feel relief that the collective international efforts to avert catastrophe in the winter of 2008/09 have been successful. But events over the past few months have made clear that it is still too early to declare the crisis over. And, just as they have done throughout the crisis, governments and central banks in Europe and around the globe continue to respond to shifting economic and financial circumstances with swift, decisive and effective action.

Recognising this, Malaysia has established the International Centre for Leadership in Finance (or ICLIF) as part of our commitment to spearhead the development of a new generation of world class leaders who can steer the financial services sector to high performance and excellence in the industry. Secondly, significant investment in the infrastructure that supports research and development will enhance the capacity for innovation. Financial support for advanced research at universities and research institutes will increase research opportunities. In addition, increasing the workforce involved in research and development will also increase the potential for innovation. Thirdly, extensive education of the consumer and business community would increase the outreach resulting in increasing demands for new and innovative products and approaches. Malaysia has implemented a ten year structured consumer education programme to increase the level of consumer awareness on the unique characteristics of Islamic financial products and the product choices offered by Islamic financial providers. Increased awareness will drive the demand for a broader range of Islamic products and services customized to their requirements at more competitive prices and through more convenient channels. The outreach has also been for small businesses on the Islamic products and services. This process prompts the financial industry to increase innovation to strengthen their competitive position. This can be reinforced by market research to enhance the understanding of customers’ distinct financial needs and their risk tolerance and therefore enable the design of Islamic financial instruments that offer tangible benefits and value to customers.