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BERLIN (MNI) – European Central Bank President Jean-Claude Trichet
said Thursday that the Eurozone is currently better off than the U.S.
and Japan.

“The paradox of Europe is that the euro area is in a better
position [in terms of consolidated position] than, say, the U.S. and
Japan,” Trichet said in a panel discussion at the World Economic Forum
Annual Meeting in Davos.

“As a single market with a single currency, we are in a better
position than others. But this is no time for complacency. We still have
to work very, very hard,” the ECB president stressed.

“In the euro area, we really have to improve governance,” Trichet
argued, pointing especially to the EU Stability and Growth Pact.

“With the benefit of hindsight, the major countries in the euro
area wanted to blow up the pact,” the ECB chief asserted. “There was a
benign neglect — quasi-universal. We had to fight very fiercely only to
maintain the pact with the small countries that wanted to maintain the
pact.”

“We had benign neglect vis-a-vis fiscal policies,” Trichet charged.
“There we have a lot to do.”

“We are shipping our message to governments: reinforcing governance
is of the essence,” he underlined once more. “We consider that there is
no contradiction between having a path of fiscal sustainability and
sustainable growth.”

Turning to monetary policy, the ECB president stressed, “We did not
engage in quantitative easing. That being said, we engaged ourselves
very early in unlimited supply at fixed rate. That is something that was
unusual.”

“Let me say that I consider between central bankers, we are very
united in purpose — to anchor inflation expectations in line with our
definition of price stability,” Trichet remarked.

“Our friend Ben Bernanke said himself: 2 [percent inflation] or
slightly below 2. When I speak of unity of purpose, I am clear. That
being said, we have different economies, different shocks,” he noted.

–Berlin bureau: +49-30-22 62 05 80; twidder@marketnews.com

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