Interview with Jean-Claude Trichet

Jean-Claude Trichet is a French civil servant who was the president of the European Central Bank, a position he held from 2003 to 2011. He says the Hungarian government and the Hungarian National Bank should act separately. He thinks Hungary should join the euro zone if all of the political parties agree on it.  According to Trichet Euro as a currency is not and never was in danger. But the situation of euro zone is questionable because of the difficulties of the member states.

Zentuccio: Is the crisis over? Is it a European crisis?

Trcihet: I would say that what we call a crisis is in my understanding is a period of structural adaptation of the advanced economies in general. Europe, the US, Japan, the UK among other nations have to deal with this. We are experiencing a very difficult period which took place first in the private sector and now it affects the fiscal policies. In that perspective we have to do hard work in all the advanced economies, particularly in Europe. We have to be able to cope with the changing world in which we are now.

Zentuccio: What do you mean by hard work?

First of all it includes reshaping the financial sector. Is it still not resilient? This is extremely important. Second of all, it is clear that those of us that have deficits, more specifically current account deficits as well as fiscal deficits have to recognize that there is no indefinite final thing to spending. The third point is that we have to improve economic and fiscal governments.

Zentuccio: Japan recently took measures, the US did well at improving its labor market. Only Europe seems to be unhealthy.

Well, different countries in Europe have different problems. There were some that were deeply indebted, some with surpluses, and then you have some which are more or less in between, not really in big deficits, not in big surpluses not in stress.  For those which are under stress have problem with credit worthiness which they have to rebuild. It has a price. It is not sustainable if you have very big deficits.

Zentuccio: Austerity vs. growth, right?

Trichet: I do not accept that kind of presentation. It seems to me that we have on the one hand there is no motto that would be valid for all Europeans. In some cases growth means sound management. Sound management means different things, countries are different. Adjustment is not easy, it calls for efforts. We know that these efforts are productive. If you spend more than you earn, you pave the way for problems.