banking system. in our economy, banks play such a dominant role that non - standard measures need to be implemented – first and foremost – through the intervention and with the active participation of banks. this is why i have sometimes referred to our non - standard measures as those of enhanced credit support. they aim at supporting banks in providing credit to firms and households on an ongoing basis. this goes a long way towards explaining events in the past. as regards the possible further additional non - standard measures, i have been very clear. on behalf of the governing council, during my last press conference in frankfurt : we will decide in our next monetary policy decision governing council meeting on 7 may. and it is on 7 may that i will make public the decision of the governing council. at this stage, as a porte - parole of the governing council, i think it is important not to create or encourage expectations. be sure that what we will decide will fully take into account the financing structure of the euro area economy and will be fully in line with our medium term strategy. when taking all our decisions, we are inspired by our remit to provide a solid nominal anchor for the economic system. as you know, the ecb ’ s quantitative definition of price stability is a key element of its monetary policy strategy. we define price stability as a year - on - year increase in consumer prices of below 2 % over the medium term. in 2003 the ecb ’ s governing council clarified that, within its definition, it aims to keep the inflation rate close to 2 % over the medium term. this clarification was aimed at confirming the robust anchor for long - term inflation expectations that the ecb had provided since the setting up of the euro. in the first ten years since the introduction of the euro, the ecb ’ s quantitative definition of price stability has proved to be an invaluable asset, guarding against undesirably high inflation and against deflation. long - term inflation expectations in the euro area, whether based on surveys or extracted from financial indicators, have been and continue to be firmly anchored at levels consistent with our definition of price stability. conclusions more than ever, in the present very demanding circumstances, confidence is key. the global economy was hit in mid - september 2008 by an unprecedented sudden loss of confidence. it was perhaps the first time in economic history that a single adverse event was able, in just a few days, to have a simultaneous adverse effect on all private economic agents in every

jean - claude trichet : restoring confidence in the global financial system speech by mr jean - claude trichet, president of the european central bank, at the annual meeting of the research institute of japan, tokyo, 17 april 2009. * * * ladies and gentlemen, i am honoured to be invited to address the naigai josei chousa kai. today i would like to share with you my views on the roots of the current financial crisis, and the policy responses which aim to address it and to inspire a new sense of direction. the g - 20, at its meeting a fortnight ago, sent a strong signal of reform that can provide the basis for a more resilient and stable global economy, in the period to come. swift implementation of this important agenda will be key. i will explain the ecb ’ s response to the financial crisis. i will also note, en passant, how our policy compares with those of other major central banks. in my view, differences in crisis management approaches between major central banks reflect differences in economic structures rather than conflicting views on fundamental principles. the ecb ’ s guiding principles are very simple and very clear. in the medium term, the ecb ’ s policy is geared towards preserving price stability in line with our objective and in so doing, creating the conditions for enduring financial stability. this policy is essential to revive a resource that has become much too scarce over recent months : confidence in the future. financial excesses – at the root of the financial crisis in the last ten years finance has seen a dramatic shift of focus away from facilitating trade and real investment to unfettered speculation and financial gambling. the assumption and hedging of genuine economic risk – the risk that companies face when engaged in product and process innovation – gradually ceased to be the main concern of international finance. over time, the creation and assumption of financial risk became the core activity of the financial industry. this is the risk posed by arbitrage and deliberate exposure to asset price changes. it reached a point where it seemed that the financial system no longer existed primarily to hedge existing economic risks, but, increasingly, to create and propagate new risks on its own. in the past two decades financial innovation and liberalisation have made important contributions to the overall productivity of our economies. but, as the demand for finance increased throughout the 1990s, intermediaries had growing incentives to develop innovative funding techniques. the securitisation of assets, for example – the transformation of