jean - claude trichet : lessons from the crisis and steps towards economic stability keynote speech by mr jean - claude trichet, president of the european central bank ( ecb ), at the 9th munich economic summit, munich, 29 april 2010. * * * sehr geehrter herr bundesprasident, lieber horst kohler, sehr geehrter herr chrobog, sehr geehrter professor sinn, meine sehr verehrten damen und herren, ich danke den veranstaltern dieser konferenz recht herzlich fur die einladung. besonders dankbar bin ich fur die gelegenheit, im anschluss an meinen langjahrigen freund horst kohler sprechen zu durfen. wir sind uns uber einen langen zeitraum hinweg in verschiedenen positionen immer wieder begegnet und haben oft sehr eng zusammengearbeitet. it has always been an enormous pleasure to talk with him and to work with him. both of us were engaged in the negotiations of the maastricht treaty. that is where we met nearly twenty years ago. we were also heavily involved with the handling of the european monetary system crisis in 1992 / 93. i remember that episode very well. it was a defining moment not only for the monetary integration of europe. it remains in our memories as a vivid example of what close and friendly cooperation can do in very exceptional and demanding circumstances. in my remarks today i would first like to reflect on the lessons that i believe we can draw from today ’ s financial and economic crisis. in the second part, i will touch on the current situation, and describe the three key steps that i believe we need to take to return to the path of economic stability. lessons of the financial crisis the financial crisis has taught us painful lessons. it has revealed fundamental weaknesses in our global financial system. in the years that led up to the crisis, the european central bank was among those institutions that warned against the under - pricing of risk in financial markets. but the growing complexity of the global financial system and specifically its international linkages made it difficult to predict how and when developments would turn. with hindsight we know a great deal about the causes of the crisis. financial innovation led to the development of new instruments that were

european central bank : press conference – introductory statement introductory statement by mr jean - claude trichet, president of the european central bank and mr lucas papademos, vice - president of the european central bank, frankfurt am main, 4 june 2009. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to today ’ s press conference. we will now report on the outcome of today ’ s meeting of the governing council, which was also attended by commissioner almunia. on the basis of its regular economic and monetary analyses, the governing council decided to leave the key ecb interest rates unchanged. the current rates are appropriate taking into account our decisions of early may, including the enhanced credit support measures, and all the information and analyses which have become available since then. we confirmed our expectation that price developments over the policy - relevant horizon will remain dampened by the marked weakening of economic activity in the euro area and globally. recent survey information indicates that, following two quarters of very negative growth, economic activity over the remainder of this year is expected to decline at much less negative rates. after a stabilisation phase, positive quarterly growth rates are expected by mid - 2010. this assessment incorporates adverse lagged effects, such as a further deterioration in labour markets, which are likely to materialise over the coming months. at the same time, available indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the governing council ’ s aim of keeping inflation rates below, but close to, 2 % over the medium term. the outcome of the monetary analysis supports the assessment of moderate inflationary pressure, as money and credit growth have further declined on an annual basis. against this background, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. let me now explain our assessment in some more detail, starting with the economic analysis. reflecting the impact of the financial market turmoil, and in particular a sharp fall in global demand and trade, economic activity weakened considerably in the first quarter of 2009. according to eurostat ’ s first estimate, economic activity in the euro area contracted by 2. 5 % quarter on quarter, after a decline of 1. 8 % in the fourth quarter of 2008. this will have a significant negative impact on the average growth rate for 2009. however, more recently, there have been improvements in survey data, albeit at very low levels. in line with such evidence, after the