further support to the euro area recovery and will accelerate the return of inflation to levels that we consider to be consistent with our objective. the governing council has done and, within its mandate, will continue to do whatever is needed to pursue its price stability objective. our very accommodative monetary policy stance has provided considerable support for the euro area recovery. by supporting growth prospects, our actions have also been beneficial for financial stability. while accommodative monetary policies over an extended horizon may have unintended consequences for certain sectors in the form of excessive risk - taking and misaligned asset prices, we do not currently see any broad based evidence of excesses in the behaviour of banks and other financial institutions and valuations of euro area asset prices. moreover, euro area countries are in a position to use macroprudential policies to address imbalances should they arise. the stability of the euro area banking sector has improved significantly over the past few years. bank capital and provisions have been substantially reinforced and bank profitability has started to rise again. however, against the background of a moderate economic recovery, this profitability remains low. structural factors may also be at play. in addition, in some jurisdictions, a high stock of non - performing loans ( npls ) continues to linger as a legacy of the earlier crisis. as this may constrain banks ’ lending capacity and their ability to build up further capital buffers, determined action is needed. cooperation among all major stakeholders, including governments, banks, regulators and investors, at national and european level, is necessary in order to make substantial progress in this field. tailored approaches, based on a thorough understanding of country - specific aspects and in the context of a comprehensive strategy that is led as much as possible by the private sector, are needed. the banking supervision arm of the ecb is working from the supervisory perspective, on identifying best practices that can be adopted by individual banks. certainly, a decline in npl ratios will also be facilitated by an environment of stronger economic growth. in the euro area, such conditions of strong and sustained growth will require the ongoing cyclical recovery to be supported by effective structural policies. in particular, reform efforts need to be stepped up to improve the business environment, which in turn will help increase productivity, employment and growth – and also make the euro area more resilient to shocks. fiscal policies should support the economic recovery, while remaining in compliance with the european union ’ s fiscal rules. the full

happened, or does more need to be done? trichet : we are half - way there. there has been a global increase in the capital requirements for banks, including those that are systemically relevant. what is still open is how we deal with other financial entities that are non - banks, what we sometimes call the shadow banking system. more transparency and appropriate oversight are needed here. conflicts of interest must be eliminated. there are also still too many pro - cyclical elements in the financial system that should be eliminated. all of this is hard work, and we still have to make a lot of progress sz : the banks are moaning about too much regulation. trichet : i do not accept the idea that we have over - regulation. we have in any case an absolute obligation to make the financial system much more resilient. the idea of going back to business as usual is deeply inappropriate. sz : is the euro still an important factor in the integration of europe? or is it now causing divisions? trichet : i believe that the euro is crucial to the achievement of a single market. do you think we would consider the united states ’ single market complete if the money used in north carolina were different from that used in wyoming, california or florida? sz : after eight years as “ monsieur euro ”, as the top central banker, do you leave any kind of legacy? trichet : my colleagues and i are very proud of the fact that, in the first 12 years of the euro ’ s existence, we have been able to keep prices stable for 331 million people. that is our mission and our mandate. sz : how does it fit into your mission that the ecb suddenly began, in may 2010, to buy government bonds from indebted countries such as greece, ireland and portugal? the ecb had previously rejected such a policy. was it a mistake? trichet : certainly not. it was one of our “ non - standard ” measures that we introduced together with the policy of refinancing banks at fixed interest rates with full allotment of bids, and the covered bond purchase programme. all these measures, without exception, were designed to help restore a better monetary policy transmission at a time when markets were disrupted. at the same time, we completely separated these measures from the interest rate decisions bis central bankers ’ speeches – our “ standard measures ” are entirely designed to deliver price stability. this separation principle is for me absolutely fundamental. sz