jean - claude trichet : strengthening the european union ’ s framework for crisis management opening statement by mr jean - claude trichet, president of the european central bank, at the european commission conference “ building a crisis management framework for the internal market ”, brussels, 19 march 2010. * * * ladies and gentlemen, i would like to thank the commission for inviting me to today ’ s conference. i trust that the discussion will help to identify avenues that will strengthen the european union ’ s framework for crisis management and resolution for the years to come. the evolving crisis reflecting on the crisis from today ’ s perspective, i would say that what is now called “ the crisis ” is a deeply evolving phenomenon. it evolved from a crisis of liquidity into a full - scale crisis of banking and finance, and then into a global financial and economic crisis. and as we are all well aware, a great deal of attention is currently focused on fiscal policy and public finances. at the same time, policy - makers around the world have so far fended off a number of threats : a global meltdown of finance, a downward spiralling of the economy and a massive increase in global levels of unemployment. fundamentally, this is a crisis of valuation. but it is also a crisis that has led us, and continues to lead us, to fundamental re - evaluation. we have had to re - evaluate our understanding of the nature of risk of major market disruptions. we have had to re - evaluate the potential responses in terms of the implementation of monetary policy and the effectiveness of fiscal policy. and as citizens and policy - makers, we have to re - evaluate our understanding of the role of finance in our economies and our societies. in particular, we must consider fundamental questions about the relative importance and limits of the pure financial “ game ” in markets, about the potential abuse of market power, and, most importantly, about the function of the financial sector in the broader economy. in my view there is a clear litmus test for this function : whether or not finance serves the real economy. financial reform therefore must ensure that finance is properly reconnected with the real economy. reform needs to go beyond the banking sector on which so much attention has been focused. we also have to look very closely at non - bank financial institutions and at the set - up and functioning of financial markets. financial markets are not always efficient. they are also not always broad, liquid and representing a fair competition of views and positions. quite

involved. conclusions the defining characteristic of any financial crisis is a collapse of confidence. the defining characteristic of the current crisis was a loss of confidence that seemed to permeate the whole world and almost instantaneously. at the height of the crisis – when irrational exuberance had turned into excessive pessimism – i repeatedly stated that regaining confidence was of the essence. since then, confidence in the short term has been restored, not least because of bold and courageous policy actions around the globe. going forward, we need to strengthen longer - term confidence, and that requires policy frameworks that will be robust against future challenges. that is the agenda on which i know we all plan to make some progress today. thank you for your attention.