of certain euro area countries in the afternoon of 6 may and on friday 7 may. at that moment in time and not before, we judged that we had a very serious problem with regard to the transmission of our monetary policy in part of the euro area, and that we had to contribute to re - establish a more normal functioning of the markets in question. our aim was not to change our monetary policy, which is to maintain price stability for our 330 million fellow european citizens. inflation is a tax on the poor and most vulnerable. q : so the ecb isn ’ t there to mop up the reckless spending of member states? a : the central bank is certainly not there to rectify the fiscal mistakes of governments, mistakes it constantly warned them about. q : nevertheless, you have already purchased government bonds to the value of €59 billion. that is a huge figure! a : those interventions are sterilised. we are maintaining our monetary policy unchanged. we believe that the present monetary policy is appropriate in order to maintain price stability. in order to avoid changing our monetary policy by increasing liquidity, we are completely re - absorbing the liquidity provided as a result of these interventions. q : isn ’ t the ecb becoming a sort of “ bad bank ” which allows commercial banks to get rid of their dubious sovereign bonds? a : no, the sole aim of our interventions is to help us to improve the transmission of our monetary policy by contributing to the better functioning of certain bond markets. q : isn ’ t there a risk that the next stage of the crisis will occur in the private debt security market, as seen in spain, where credit institutions are very vulnerable? a : the calling into question of certain private debt instruments was the source of the international crisis that we are experiencing. it is as a result of this “ private ” crisis that we have been faced later with the problem of sovereign debt risk. all industrialised countries must strengthen the soundness and credibility of all public policies, and in particular fiscal policy. it is also essential that the overall balance sheets of certain institutions continue to be adjusted. this is now happening through the “ stress tests ” which europeans have fortunately decided to conduct, the results of which will be published, bank by bank. q : are there many skeletons still hiding in the closets of banks? a : the purpose of the stress test is to measure the resilience of banks in especially difficult circumstances. transparency is very important. this is what we

jean - claude trichet : the ecb ’ s enhanced credit support keynote address by mr jean - claude trichet, president of the european central bank, at the university of munich, munich, 13 july 2009. * * * introduction ladies and gentlemen, it is a pleasure to be in munich today and speak at this renowned university with its strong economics faculty. i would like to thank the organisers, professor hans - werner sinn of cesifo and marc beise, the chief economics editor of suddeutsche zeitung, for inviting me here. i am delighted to have this opportunity to talk about the ecb ’ s policy actions in these times of exceptional challenges for monetary policy - makers. i also hope to contribute to the academic debate on monetary policy. an active exchange of views between academic and policy - making circles is important for both sides. the munich seminars have become one of the best - known events of their kind in europe. more events of this type are needed. cesifo – with its close links to the university of munich – has established one of the most active and widely respected platforms for european policy debate. it is therefore a great pleasure for me to be here talking about the field in which european integration has progressed the furthest, namely monetary policy - making. in the last two years the environment in which we operate has changed very profoundly. we went through a period of global financial panic, and we are still in demanding and uncharted territory. i am therefore pleased to report that the policy toolkit of the european central bank – a young institution albeit benefiting from a very solid legacy – has been up to the challenge. the ecb ’ s actions since the onset of the financial crisis have been bold, and yet firmly anchored within the medium - term framework of our monetary policy strategy. we took unprecedented action in august 2007, on day one of the financial turmoil, when few others had identified the potential for macro financial disruption. we stepped boldly into the breach when the collapse of a major financial player last autumn caused interbank funding markets to stop functioning. moreover, since the crisis began, not one systemically important financial institution has collapsed in the euro area. this is no small achievement, given the damage we have observed as a result of such events. since october 2008, our key policy rate has been cut from 4. 25 % to 1 %. in addition, and just as importantly, we have embarked on a policy of fully accommodating