on the record as having always asked for full and decisive implementation of the governance measures that already exist. we combated very fiercely the position of the heads of government of the three major countries in the euro area when they wanted to weaken formidably the stability and growth pact, back in 2004 and 2005. it was a very, very fierce battle. they wanted to really unravel the pact. what i would sum up as our position today is very simple. we call for “ a quantum leap ” in the reinforcement of fiscal surveillance, with, in particular, what i would call the reversal of the burden of the proof. we have called for the “ quasi - automaticity ” of procedures and sanctions. we have called for a reinforced independent way of assessing the fiscal situation and we have also called for a quantum leap as regard the surveillance of competitiveness and imbalances in euro area member countries. and, finally, we have called for decisive measures to enhance the quality of statistics. as regards the methodology, we consider that a change of the treaty would be appropriate, but we accept that this would involve a long or very long procedure at the level of 27 eu countries. that ’ s why we have called for the maximum use of secondary legislation as a first step, to exploit all the possibilities that secondary legislation can offer to go in the direction of the necessary goals. that ’ s the idea. financial times : and what about temporary suspension of membership or even expulsion of a member that is systematically breaching this...? jean - claude trichet : no, i don ’ t call for expelling members, but a temporary suspension of voting rights is something that should be explored. financial times : in retrospect, shouldn ’ t europe have undertaken bank stress test earlier? jean - claude trichet : i think so. the ecb and the bank of england were very much in favour of this stress test. of course, we have a very complex institutional environment, involving cooperation in real time among 27 eu capitals. it was really essential to have this exercise undertaken on a unified basis, simultaneously. you know that we particularly welcomed the detailed publication of the results for the 91 banks involved. financial times : are you worried about deflation in europe? jean - claude trichet : no, i do not see the materialisation of a risk of deflation, or either of inflation, at present. we went through the heat of the crisis without any materialisation of deflationary

question too … jean - claude trichet : i guess so, yes. i would say that the correct response is that we are in a situation where central banks in particular, and also other authorities, have to remain alert and have to know that we are in an uncertain universe. we always have to be prepared for new challenges that can not necessarily be foreseen and that might be in some respect unpredictable. we have permanently to be in a state which i call credible alertness. financial times : how close did the euro area come to disaster in may? jean - claude trichet : no, i don ’ t think that the euro area was close to disaster at all – seen from inside. i know how europe functions. i know how the constellation of authorities functions, at the level of the various nations and at the level of the european institutions,. seen from the outside, i would say that it ’ s always difficult for external observers to judge and analyse correctly the capacity of europe to face up to exceptional difficulties. there is no other model to which we can refer – either in history or in a fully fledged political federation such as the us, and certainly not in comparison with centralised states such as japan or the uk. but i ’ m always confident. in may we had additional proof of the capacity of europe to cope with new challenges. financial times : can you explain why [ in may ] the ecb changed its mind on government bond purchases? there was a lot of criticism in germany especially. jean - claude trichet : when i talk of “ credible alertness ” i really mean it. when we decided on 9 august 2007 that it was appropriate to embark in an unlimited supply of liquidity in our own money market, and we supplied 95 billion euros for 24 hours, that was not a decision that was in the textbooks. we were criticised a little bit at the time, and then, after a while, it was recognised that this decision had been wise and lucid. so in may this year i would say that we were in a situation where it was considered appropriate by the governing council of the ecb to take the decision, as i said earlier, to help restore a more normal functioning of our own monetary policy transmission mechanism. we had previously purchased covered bonds and we had not excluded intervening in other markets. financial times : what lessons do you draw in terms of euro governance from this crisis to date? jean - claude trichet : first of all, we are