jean - claude trichet : a unique perspective speech by mr jean - claude trichet, president of the european central bank, at the celebration of the publication of otmar issing ’ s book “ der euro ”, frankfurt am main, 15 april 2008. * * * meine sehr geehrten damen und herren, es ist mir eine große freude, heute anlasslich der veroffentlichung von professor otmar issings buch uber den euro zu ihnen zu sprechen. der zusammenschluss von jetzt 15 eumitgliedstaaten in der europaischen wirtschafts - und wahrungsunion, mit dem euro als der gemeinsamen wahrung fur rund 320 millionen europaische burgerinnen und burger, ist einer der großten erfolge der wahrungsgeschichte. otmar hatte als direktoriumsmitglied der ezb in den ersten acht jahren ihres bestehens und als direktoriumsmitglied der bundesbank in den acht jahren davor maßgeblichen anteil an der erfolgreichen einfuhrung und etablierung des euro. sein buch bietet damit eine einzigartige perspektive auf die erfolgsgeschichte unserer gemeinsamen europaischen wahrung. why has the creation of the euro been a success story? of paramount importance is the fact that, right from the beginning, the ecb was able to establish, and then maintain, a high level of credibility to effectively safeguard price stability in the euro area. during the transition to the euro, market interest rates on instruments denominated in euro became aligned all along the yield curve with the lowest – and not with the average – rates prevailing in the euro area prior to the euro. this demonstrated that the ecb had managed to inherit the high level of credibility that had been achieved by the most successful national central banks joining the monetary union, in particular the deutsche bundesbank. you know how proud i was myself to have run a monetary policy that had given my own national currency the same level of credibility as the dm before the euro. the ecb has fully maintained this achievement during the now more than nine years since the start

that “ credible alertness ”. focus : at the moment, the markets are addicted to cheap money – to low interest rates. politicians, bankers and stock market traders have already become too used to this situation, and as a result the risk of inflation is on the rise. how do you intend to change this? trichet : you can be sure that the european central bank will continue, as before, to maintain price stability. keeping inflation expectations solidly anchored – in line with our definition of price stability – protects us against the materialisation of both inflationary and deflationary risks. we succeeded in avoiding deflation at the peak of the crisis. you can be sure that the needle in our compass will always point towards price stability. focus : how quickly have you taken action during the crisis? trichet : as i have said, alertness is of the essence. on 9 august 2007, for instance,... focus :... just before the us real estate bubble burst... trichet :... we were the first to diagnose that a major crisis was unfolding and supply additional liquidity to the money market. we did so because we had realised that something exceedingly dangerous was developing. focus : could the ecb really raise interest rates on its own – i. e. without the us federal reserve doing so as well? if the ecb were to take such action, the euro ’ s exchange rate vis - a - vis the dollar would be sure to shoot upwards, causing european exports to collapse. and that is something nobody in europe would want... trichet : i am convinced that the us authorities – both the central bank and the treasury – consider that a strong dollar vis - a - vis the other major floating currencies is in the interests of the united states. ben bernanke and tim geithner have made this very clear. focus : do you believe what those responsible in the united states are saying? the us economy is currently benefiting immensely from the cheap dollar. trichet : i believe in the sincerity of the people i have just mentioned. they know that a loss of monetary credibility would be damaging. focus : nevertheless, if the excessively lax monetary policy in the united states were actually the reason why you needed to raise interest rates in europe, you would be unable to do so without the us central bank following suit. trichet : let me repeat myself. every central bank has its own responsibilities –