Tags: Trichet | EU | Listen | Debt

Trichet: EU Leaders Didn't Listen to Me About Debt

By    |   Monday, 31 Oct 2011 02:13 PM

Too many European Union leaders did not understand the gravity of the Greek debt situation following years of failure to adhere to rules on borrowing, the outgoing boss of the European Central Bank (ECB) told CNBC.

Following the three-pronged agreement by EU leaders last week aimed at drawing a line under the debt crisis, Jean-Claude Trichet told CNBC, the problems Europe faces now could have been averted if governments had listened to the ECB’s numerous warnings on debt.

Market Watch says euro-zone leaders agreed to the broad strokes of a deal in which Greece will see a nominal 50 percent cut in the face value of its bonds held by private investors.

As he prepares to vacate his position as President of the ECB, Trichet continued to warn EU leaders about the handling of the zone's debt.

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Jean-Claude Trichet
(Getty Images photo)
“It is the responsibility of individual countries to fully be consistent with what they said, namely that Greece was Greece, everybody recognizes that is a special case," MarketWatch quoted Trichet as saying in an interview with BBC.

"But for all other countries, signature will be honored. That is essential,” Trichet reportedly added.

However, Trichet told CNBC his warnings on debt left him very isolated, with even mainstream economic thinking against his tough stance on government borrowing.

Whether those who Trichet accuse of lacking understanding will heed his advice going forward remains to be seen. Tomorrow Mario Draghi will step into the role of ECB President, but some suggest he will find working conditions to be much the same as they were for his predecessor.

Michael Schubert, an economist at Commerzbank AG in Frankfurt, told Bloomberg, “the Italian has been on the bank’s Governing Council since 2006 and the role of chairman is limited to finding a consensus among its 22 other members rather than striking out alone.

“Draghi can’t do much different from Trichet,” Schubert told Bloomberg. “His influence is rather limited.

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Too many European Union leaders did not understand the gravity of the Greek debt situation following years of failure to adhere to rules on borrowing, the outgoing boss of the European Central Bank (ECB) told CNBC. Following the three-pronged agreement by EU leaders last...
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2011-13-31
Monday, 31 Oct 2011 02:13 PM
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