Trichet stressed that countries have to take up their responsibilities. Major improvements need to be made to prevent bad fiscal behaviour, ensure effective implementation of the recommendations made by partners and enforce real and effective sanctions in case of breaches.
Speaking at the Economic Conference of the Austrian Nationalbank, Trichet explained the ECB Securities Market Programme. It consists of interventions in the euro area’s public and private debt securities markets, in order to sterilise the impact of these interventions on the liquidity conditions in the banking system, we re-absorb the liquidity injected.
More specifically, the programme focuses on these securities markets that have been affected by severe disruptions recently. These tensions did not come out of the blue. The sky had darkened since the end of last year, when difficulties with public finances in some euro area countries came into the focus of financial market participants. Following prolonged discussions about the possibility of a loan support facility for Greece, tensions rose further towards the end of April and the beginning of May.
He called on euro area governments to work together. Looking ahead, countries have to take up their responsibilities. Major improvements need to be made to prevent bad fiscal behaviour, ensure effective implementation of the recommendations made by partners and enforce real and effective sanctions in case of breaches. It is equally decisive for the European Commission and the Eurogroup to engage in an effective control of the evolution of relative competitiveness inside the euro area, including of the evolution of unit labour costs. And the implementation of structural reforms, under the surveillance of the peers, is of the essence to elevate the growth potential in Europe.
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