ECB warns on currency, calls for euro sanctions

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Báo Đầu Tư English - 49 month(s) ago 2 readings

ROME, October 17, 2010 - European Central bank chief Jean-Claude Trichet warned against excessive currency volatility and called for stricter rules on European debt in an interview with Italy's La Stampa daily published on Sunday.

Asked about possible dollar devaluation, Trichet said: "On exchange rates I will say that excess volatility and disorderly movements in exchange rates always have adverse implications for economic and financial stability."

"And I consider it very important that the US authorities also recently confirmed their long-standing position that a strong dollar vis-a-vis the other major floating currencies is in the interests of the United States," he added.

Trichet also stressed the importance of debt reduction in the 16 euro countries in the wake of the economic crisis and called for stricter sanctions against countries that break eurozone rules on their deficit and debt levels.

"For us, the proposals of the European Commission move in the right direction. But more ambitious reforms are needed," he said.

"With the benefit of hindsight we know now that it is very important to engage in quasi-automatic sanctions and with an accelerated procedure.

"Sanctions must be possible in the early stages of macreconomic surveillance," he added.

He also rejected recent comments by German central bank chief Axel Weber that the ECB's programme of buying governments bonds should be scrapped.

"No! This is not the position of the governing council, with an overwhelming majority. This non-standard measure... was designed to help restore a more normal functioning of our monetary policy transmission mechanism," he said.

A transcript of his interview was made available in English by the ECB.

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