By Martin Banks - 23rd January 2008
Europe’s top banker has called for measures to ensure the continent can weather any economic slowdown ahead.
Appearing in parliament on Wednesday, European Central Bank president Jean-Claude Trichet said that “very important lessons” should be drawn from the current global financial crisis.
While advocating a "careful reflection", he said the crisis had “highlighted that some categories of risks have been underestimated by banks."
He told MEPs that “it is important to permanently identify the various risks at stake in the global financial system.”
Trichet also highlighted the risk of inflation during his speech to a joint meeting of the economic and monetary affairs committee and representatives from national parliaments.
He said that price growth was still the ECB's main concern, and this outweighed the risks of slowing economic growth.
"In all circumstances, but even more particularly in demanding times of significant market correction and turbulences, it is the responsibility of the central bank to solidly anchor inflation expectations to avoid additional volatility in already highly volatile markets," he explained.
He also emphasised that in times of economic turbulence "it is the responsibility of the ECB to solidly anchor inflation expectations" and avoid "additional volalility."
At the end of the two-day meeting, committee chair, French Socialist deputy Pervence Beres, said this week’s slump in global stock markets had taken the banking community by surprise.
She told this website, “Clearly, it was not expected, not least by myself, and all parties involved need to take the measures necessary to avoid a repetition.”
On Tuesday, EU economics commissioner Joaquin Almunia told the meeting he believes that Europe was in a better position than the US to weather any economic slowdown ahead.
"We can already observe that growth in 2008 will be lower than we expected a few months ago and inflation higher," said the Spanish official.
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