EU discusses financial crisis

Tuesday's hearing at the Economic Affairs committee in the European Parliament was not an ordinary one. Members of the European parliament had insisted that the European Central Bank and the European come discuss the crisis in financial markets. Jean-Claude Trichet, President of the European Central Bank: “More than ever we have to be fully conscious that something that is happening anywhere in the global sphere and global finance can have repercussions through various channels and we are never sufficiently lucid in identifying the various channels that might function.” VO: Earlier in the day, the European Commission already cuts its growth outlook for the Euroopean economy, citing uncertainty created by the US mortgage crisis. Jaoquim Almunia, European Economic Affairs Commissioner: “We had estimated in May a growth in GDP of 2.9 percent, now it's 2.8. For the euro area, we estimated 2.6 and now it's 2.5” VO: Trichet said he sees the turmoil as a temporary correction, and expects the situation to be normalized soon. Trichet: “This episode should drive us back to normal but I say that with great prudence. We are pragmatic, we are realistic. We all know that such episodes of market correction have aspects of active behavious overshooting high level of volatily, during the market correction itself.” VO: Trichet also had to answer questions on the independence of the European Central Bank. Last week's decision by the ECB to NOT raise interest rates was seen as playing into the hands of French President Sarkozy. Trichet: “Nobody has the slightest doubt that we are fiercely independent and that our credibility is depending on this independence that the people of Europe has granted to us.” VO: Trichet's next regular appearance at the European parliament is on the 8th of October.

Submission | September 12, 2007

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