jean - claude trichet : interview with el pais interview with mr jean - claude trichet, president of the european central bank, conducted on 15 may and published on 16 may 2011. * * * question : how would you describe the situation of the euro? answer : we are in an economic and monetary union. from my point of view, monetary union has worked well : we have delivered price stability – fully in line with our definition of “ below, but close to 2 % – during the first 12 years of the euro, the euro is a solid and credible currency, and inflation expectations are solidly anchored over a horizon of five or ten years. the economic union, for its part, has shown its weaknesses during this global crisis and it has to improve very significantly. all pillars of the economic union have to be reinforced : first, we need a strengthened stability and growth pact to ensure a rigorous surveillance of fiscal policies ; second, we need a close surveillance of the competitiveness indicators and of the imbalances in the euro area, something that we have been calling for all over these last years, since 2005 ; third, we need to accelerate the implementation of structural reforms, which is an objective for the economic union ( the “ 27 ” ) as a whole, as well as in the euro area ( the “ 17 ” ), in order to elevate the growth potential of european economies. q. what ’ s behind the dissatisfaction that seems to be affecting the euro? a. i think there is criticism of the behaviour of some governments regarding their own economic and fiscal policies, and also on others, because they did not exert appropriately the surveillance on their peers.. but i don ’ t think the criticism concerns the single currency, which is a clear success. i have seen many surveys in different countries showing that citizens are supporting the euro. that is the case in spain. q. does rising debt indicate that the euro may be at risk? a. as i said, the euro is a solid and credible currency. the economy of the euro area as a whole is in a better fiscal position than the us or japan, with a likely deficit of 4. 6 % this year compared with around twice that figure in the us or japan. sovereign debt problems are global, not just a european problem. the paradox is that, while fiscal performance at the consolidated european level is relatively good, we have in the euro area some countries which are clearly in a difficult situation, and that

require a major adjustment. q. despite your rejection of a possible restructuring of greek debt, markets are insisting that that is the only way out. a. the ecb ’ s position has been clear from the beginning. we have an adjustment plan set by the imf and the commission. what we are asking for is that the plan be implemented as strictly as possible, as it was negotiated, with rigorous efforts being made by greece. the adjustment, engaged by this country is essential for its sustainable, medium term growth, job creation and the stability in the euro area. and there is no other way than the strict application of this adjustment plan. q. what can we expect from the summit in brussels on monday? a. the ecofin and the eurogroup will have to examine a number of issues, including the programme for portugal, which has been negotiated by the imf and the commission, in liaison with the ecb. the ecb attaches a great importance to the fact that this programme has been approved by various political sensitivities in portugal. q. has it been ruled out that a country could leave the euro? a. i already said that i consider this an absurd hypothesis. but let me come back to the euro. if, in 1998, we had been told that for the 12 first years of the euro, we would have a single bis central bankers ’ speeches currency that keeps remarkably its value, with average inflation below 2 %, a better result than in any member state in the past 50 years, many people would probably have said that it was too good to be true. today it ’ s a reality and these achievements are documented. q. is the standing of the ecb at risk because of the rating cuts for the countries from which you have collateral? a. we are applying our own rules on the matter and are paying close attention to risk management. it is also useful to bear in mind that we are talking about three economies that account for around 6 % of the gdp. the other 94 % of the gdp of the eu are in a very different position. q. the ecb has embarked on debt purchasing but is doing it intermittently. a. i ’ ve always said we are transparent in the management of this issue. i have no other comment. q. but that is a function that is not supposed to be performed by the ecb, it is not part of the mandate. should another institution take on that task? a. all these