Governments and monetary authorities, which stepped in to cushion the economic fall and prevent a collapse of the global banking system during the financial crisis of 2007-2009, now must find a way to reduce their debts without compromising economic growth, a delicate balancing act.
"The primary macroeconomic challenge for the next 10 years is to ensure that they do not turn into another 'lost decade,'" Trichet said in speech at the US Federal Reserve's annual symposium at Jackson Hole, Wyoming.
Though he indicated the Basel regulatory process might yield results in coming days, Trichet's speech was largely theoretical, as he avoided any direct references to current monetary policy ahead of next week's meeting of the ECB.
In the run-up to the 2007-2009 financial crisis, both businesses and individuals took on what would eventually prove to be unsustainable levels of credit, Trichet said.
As that bubble popped, much of that burden was transferred to the public sector and central banks. Official interest rates in Europe currently stand at 1 percent.
"The enormous challenge for policy-makers in the advanced economies is thus to set in motion this mutually reinforcing positive scenario of deleveraging and strong and sustainable growth."
Trichet, who said the Basel regulatory process might yield concrete results in coming days, said policy-makers should try hard to act more preemptively in the future, however difficult it may be to foresee an oncoming crisis.
Trichet was speaking at a time when concerns about Europe's economy, while still prevalent in the markets, had abated significantly from the spring, when fears about highly-indebted countries like Greece, Spain and Portugal sent financial markets into a tailspin.
Meanwhile, ECB Governing Council member Axel Weber said on Friday that Europe is on the brink of a self-sustaining recovery.
In an interview with CNBC, Weber said now was the time to put fiscal consolidation on top of the political agenda.
"We are bordering on self-sustaining recovery in Europe and there is not much concern for renewed recession, but performance will be somewhat weaker going forward," he said at an annual central bankers retreat at Jackson Hole.
Germany's economy expanded 2.2 percent in the second quarter, its fastest rate in around two decades and boosting expectations for the 16-nation euro zone.
"Fourth quarter, third quarter are going to be lower numbers than that (of Q2) but growth is going remain and recovery is on track," Weber said.
The ECB is widely expected to hold rates at a record low of 1 percent next week and upgrade forecasts for economic growth even as it extends its policy of offering banks unlimited funds until into early 2011 in an acknowledgement of continued tensions on money markets.
Weber declined to comment on the liquidity decision ahead of the Sept. 2 policy meeting but was reported as saying last week that it would be "wise" to keep full allotment in all maturities offered until after the end of the year.
So far the ECB has said that unlimited liquidity will be on offer in the shorter term, one week and one month operations until at least mid-October, and three-month money and until the end of September.
Weber, who also heads Germany's Bundesbank, said the country's labor market was already improving. The jobless rate fell to 7.6 percent in July.
"Unemployment only moved up marginally (in Germany) and it's falling again already ... We expect the unemployment rate in Germany to be around 7 percent going forward and falling continuously," he said.
Although it was too early to declare the sovereign debt crisis over, market tensions had eased and budget reforms should take center stage.
"Seeing that the economies have stabilized and are now growing again, I think it is time to put fiscal consolidation on top of the political agenda in most of our economies."
Weber, one of the frontrunners to replace ECB President Jean-Claude Trichet next year, brushed off a question about whether he was interested in the top job, saying: "I've got a good job, and that is (as) president of the Bundesbank ... I am solely focused on that job."
