Trichet: key ECB policy actions in the crisis
23 June 2009
Trichet remarked that ECB has taken forceful action to mitigate the effects of the crisis as events have unfolded. “We were the first to act back in August 2007".
Mr Trichet remarked that ECB has taken swift and forceful action to mitigate the effects of the crisis as events have unfolded. “We were the first to act back in August 2007, temporarily providing on day 1 of the turmoil unlimited liquidity to preserve as normal as possible the functioning of the money market.”
He also stressed that ECB measures, together with the support measures of euro area governments, have yielded one very important result that sometimes seems to be overlooked: there has not been a single failure of a systematically relevant financial institution in the euro area. This is an achievement whose importance cannot be overstated.
The ECB’s measures fall in two categories: first, conventional measures in the form of interest rate changes; second, what have become known as ‘non-standard’ measures. The latter measures taken together constitute what we call the ECB’s policy of enhanced credit support. These are specific actions we have taken to sustain the flow of credit above and beyond what could be achieved through interest rate reductions alone.
He concluded by saying that “we are still in the downturn phase. While there are first signs that the pace of economic weakening is decelerating, we must remain alert. We are in uncharted waters, and there are still risks of a sudden emergence of unexpected financial turbulence.”
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