German news weekly Der Spiegel reported that Jean-Claude Trichet said that since the beginning of the financial crisis in 2008 "we have experienced and we are experiencing really dramatic times." Trichet was quoted as saying that there was no doubt the economy "is in its most difficult situation since World War II or perhaps even since World War I."
In an interview to be published Monday, Trichet said the recent exacerbation of the euro zone's debt crisis had provoked a market reaction similar to that at the height of the global financial crisis in 2008. "The markets didn't function anymore, it was almost like in the wake of the Lehman (Brothers) bankruptcy in September 2008," he was quoted as saying. Even though European leaders last weekend agreed on rescue measures including a 750 billion euros ($935 billion) loan guarantee package for troubled euro zone nations, Trichet urged further action to address the crisis' underlying problems.
The ECB's president called for a "quantum leap" in control of financial and economic policy across the 16-nation currency zone, the magazine reported. "We need improved structures, to avoid and sanction wrongdoing," Trichet was quoted as saying. "We need an effective implementation of the mutual control, we need effective sanctions for breaches of the stability and growth pact." In the wake of Greece's debt crisis, the euro has come under intense pressure, especially with fears that it will spread to other heavily indebted euro zone countries.
The euro sank to near a four-year low against the dollar on Friday in late New York trading, buying $1.2355. Trichet urged European leaders to accelerate the consolidation of their deficits. "They know what is at stake," he was quoted as saying.
Meanwhile, the European Union's energy commissioner also cautioned that the euro's crisis isn't over yet. Pointing to the recent rescue measures, Guenther Oettinger told German daily Tagesspiegel: "We have won time with the past days' decisions, but haven't decided the battle's outcome yet." The top priority for the euro zone's nations now must be to move ahead on deficit reduction, the former German state governor was quoted as saying.
