Sunday, June 19, 2011
Trichet warns of widening global imbalances
European Central Bank President Jean-Claude Trichet on Sunday raised concern about widening global imbalances after the financial crisis, calling them one of the main challenges for the global economy.
Global imbalances were blamed for contributing to and aggravating the financial crisis and recession that struck the global economy in 2008 and 2009.
"A concern is that after some partial reduction induced by the crisis, global imbalances are starting to widen again," Trichet said according to a speech text for a ceremony, in which he was awarded the Global Economy Prize 2011 by the Institute for World Economy in the northern German city of Kiel.
Such imbalances raise challenges for international monetary and fiscal cooperation, Trichet said, referring to global imbalances as "one of the main challenges facing the global economy and the world community."
The euro zone is struggling with a severe debt crisis, facing its toughest test as it tries to prevent Greece defaulting.
The ECB is at odds with governments, including Germany, over a rescue package for Greece, and in particular over the terms of any moves to draw private sector lenders into the bailout operation.
Trichet criticized the currency bloc's policymaking process, saying governance was lacking.
"Governance of the economic union is insufficient," he told an audience in the northern German city of Kiel after receiving the Global Economy Prize.
"We are not responsible for governance in the economic union," he added, referring to the role played by the ECB. "In this domain we act as an adviser."
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