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Talking about Davos, Trichet said that this is a unique occasion when we can compare notes with other Davos meetings. The private sector, both financial and non-financial, as well as public authorities, executive branches, members of parliaments, central banks, coming from both, the industrialized and the emerging world, will be presented at the World Economic Forum.
Some financial institutions and market participants who see that the market as functioning again have forgotten that governments put over 25 per cent of GDP of taxpayer risks on the table. These institutions miss the point that if things are progressively back to normal functioning, this is not thanks to the spontaneous behaviour of the system itself, but very largely due to the incredible engagement and commitment of public authorities.
When asked about European banks forthcoming their potential losses, he answered that the IMF and ECB analysis, published in the last Financial Stability Review, stressed that loan provisioning is now the main issue for most institutions rather than so-called toxic assets.
The last question was on Ben Bernanke and his possible renovation as Fed Chairman. Trichet supports Ben Bernanke and said that “he is in very great esteem and very much appreciates the cooperation between the Fed and the ECB, which became particularly close as the crisis unfolded. I do hope and am confident that he will be confirmed by the US Senate.”