jean - claude trichet : interview in bild interview with mr jean - claude trichet, president of the european central bank, in bild, germany, conducted by mr oliver santen and published on 15 january 2011. * * * mr trichet, in one word, how would you describe the state of the euro today? if you allow me two words : credible and stable. will the euro crisis get worse this year? let me be very clear : this is not a crisis of the euro. rather, what we have is a crisis related to the public finances of a number of euro area countries. all governments have to put their finances in order, and above all those governments and countries which have lived well beyond their means in the past. how are the euro area countries ever to reduce the debt, now totalling €7 trillion? this year, the budget deficit in the euro area will be half as high as that in the united states or japan. virtually all advanced economies face acute fiscal problems. this is something that is often forgotten. that being said, this is no time for any complacency. let me repeat : the ecb expects the governments in the euro area to make enormous efforts to bring down their debt. some countries have to get their debt under control again. can you understand that many germans are afraid of inflation? the germans are right to be fiercely against inflation. inflation hurts in particular the poorest. price stability is a precondition for growth. but the germans and the european citizens do not need to be afraid : we have delivered and we will deliver price stability. inflation in europe rose to 2. 2 % in december, the highest rate for two years. we are always concerned if inflation rises and are following developments very closely. but the figures for december can be accounted for, above all, by rising energy prices. let me say something about the longer - term figures. in the last 12 years the average rate of inflation in the euro area has been 1. 97 %, and in germany only 1. 5 %. those are better figures than at any time in the 50 years before the euro was introduced. in germany, inflation was 2. 2 % in the 1990s, 2. 8 % in the 1980s and even higher in the 1970s. these figures speak for themselves. but why does nearly everybody have the impression that the euro has made life more expensive? that may have been the case ten years ago. i do not believe that this

– risky? there is a real debate on this subject... i encourage all of our critics to take a few moments, a few seconds, to consider what things would be like now if we hadn ’ t done what we did. if the ecb hadn ’ t taken the measures it has taken in recent years, there would be no growth in the euro area. inflation, according to our calculations, for what they are worth, using models developed by ecb economists, would be half a point weaker, i. e. it would be negative, with all the risks of a deflationary spiral that that entails. thus, the alternative scenario is frankly not very attractive. monetary policy has helped to boost growth in the euro area. of course, it is not enough. you need reforms, you need productivity, you need projects to finance. we can make the financing of projects more attractive but then there have to be projects to finance. it ’ s up to firms and the member states to take care of that. but without the impetus provided by monetary policy, growth would not have picked up. behind your question, there is the issue of possible risks to financial stability... yes, the risks of bubbles.... well, we can ’ t see these bubbles. there are no credit bubbles in the euro area. moreover, the banking sector continues to shrink in the euro area, and for good reason : the size of the banks had become excessive. there is no overvaluation of assets, for example, on the stock and property markets, on average, in the euro area. there may be small bubbles, some simmering in certain segments of the markets, but that is for the national authorities to deal with. but there is no financial stability problem in the euro area today. we are vigilant, we will continue to keep a close eye on developments, but at the moment the assessment is clearly positive. bis central bankers ’ speeches