what does the ecb say to the fact that, in the context of the second package for greece, governments have nonetheless been talking about solutions such as a debt rollover or a partial debt buyback, which could lead to default? trichet : the responsibility for this lies with the governments. the governments have been warned, in no uncertain terms and using all possible means. i have said so publicly. i have explained in detail to the heads of state and government and to the finance ministers, on several occasions, that, if a country defaults, we will no longer be able to accept its defaulted government bonds as normal eligible collateral. the governments would then have to step in themselves to put things right. that would then be their duty. ftd : what does that mean in concrete terms? trichet : in the event of a decision by the governments leading to a selective default or a default, which, again, we are warning against loud and clear, the governments would have to take care that the eurosystem is presented collateral that it could accept. ftd : when it comes to deciding whether a default has occurred, will the ecb rely, as it has until now, on the rating agencies, or might the decision not be dependent on what they say? trichet : again, it is not the working assumption of the governing council. ftd : let ’ s talk about the crisis management of the euro area governments. the heads of state and government and the finance ministers give the appearance of being a chaotic bunch. they often create such a cacophony that it inflames the crisis rather than dampening it. what needs to change? trichet : there is an absolute need to improve “ verbal discipline ”. the governments need to speak with one voice on such complex and sensitive issues as the crisis. it is, of course, complex to take into account the need for sound, shared management of the economic pillar of the economic and monetary union, whilst fully respecting the functioning of the 17 democracies of the euro area. but speaking with one voice in a period of crisis is of essence. and, after all, it is what was possible after lehman brothers at the end of 2008. ftd : some euro area governments have said that chancellor merkel has frequently acted too slowly and has thus made the crisis even worse. is that true? trichet : not in the least. i would see a discussion of this kind as being completely misplaced in

difficult in recent years. regarding the second question – how have unconventional measures helped these countries in implementing an independent monetary policy – i will argue that negative interest, foreign exchange market interventions and quantitative easing programmes – instruments each tailored to suit a country ’ s specific needs – have helped these central banks to regain a certain room for manoeuvre. but i will also assert that, when major disruptions occur, central banks cannot always keep inflation and growth stable within a targeted range. this, in turn, is not a new insight per se, in that it adheres to the central banking consensus that monetary policy should be geared to the medium term, and that, depending on the environment, certain short - term fluctuations in output and inflation are unavoidable. allow me to begin by providing a definition of what is meant by an independent monetary policy. a country with free movement of capital has two means of achieving monetary policy goals like price stability. first, it can peg the exchange rate of its currency to a foreign currency, thereby adopting the other country ’ s monetary policy. if the two economies move in parallel and the monetary policy of the other country is sufficiently stability - oriented, price stability can be imported by this means. or, second, a central bank can pursue a monetary policy that is bis central bankers ’ speeches explicitly tailored to suit the specific needs of that country. the monetary policy trilemma is that, given free capital movement, such a tailored, independent monetary policy is only possible with a floating exchange rate. of course, as a small open economy pursuing an independent monetary policy, switzerland is also exposed to global influences, and particularly to those from within europe. first, trade relations are of central importance ; fluctuations in consumer demand within the euro area are reflected in the exports of neighbouring countries, and influence their economies. second, changes in the monetary policy of the euro area have repercussions. interest rate cuts by the ecb usually lead to an appreciation of currencies in neighbouring countries. this dampens growth and lowers inflation. third, uncertainty during the euro crisis precipitated capital flight towards neighbouring countries, thereby placing exceptional upward pressure on their currencies and thus rapidly changing their monetary conditions. the monetary policy of neighbouring countries must take into account the influences via these channels on domestic economic developments. the most significant advantage of conducting an independent monetary policy is that it allows the central bank to address the specific needs of its own economy. countries which join a currency union re