Today’s speech delivered by the European Central Bank (ECB) President Jean-Claude Trichet was a reminder to many that Europe still faces hardship, regardless of the progress which has already been made. The speech was part of a full-day conference in Madrid, Spain, titled Reform of the Financial System.
Trichet’s remarks served primarily as a warning not to become complacent with recent growth figures and estimates. He stated that many were returning to a business-as-usual mentality given the recent confirmations of stable economic recovery. Trichet argued that reforming the European financial system was necessary to ensure against a repeat of the weakness experienced in 2007/08, which is still ongoing.
Many analysts have taken his remarks as a warning that further weakness is ahead and that the current reform process, which he noted was only half done, has still not resolved the issue of economic fragility throughout the region. Policymakers across the euro zone have been able to work together to bring the financial system under review and make necessary changes, but much more work lies ahead, according to Trichet.
He pointed a finger at Greece by remarking on her continued debt woes and fragile system. But he highlighted the plan which Greece had devised for herself and urged its leaders to stick to that plan and continue implementing these reforms.
All in all, Trichet’s speech was taken as optimistically cautious. His remarks were positive, though he appeared reluctant to express hubris at the progress already made. Trichet’s speech, delivered in English, was filled with hawkish statements which so far appear to have supported the EUR going into next week’s trading. But long-term growth for the euro zone, he argued, would depend on Europe’s willingness to finish what it started regarding these financial reforms.
