How will Jean-Claude Trichet run the ECB? Bank watchers are poring over his comments for clues. Here, in excerpts from a BusinessWeek interview and in testimony given to the European Parliament, are his views:
On his responsibilities as ECB head:
The ECB governing council is much more of a team than is usually understood. We constructed the single currency together. There is a very high level of mutual trust and confidence. The president is not an isolated person in charge alone but the team leader. In all independent institutions like the ECB, decisions have to be collegial. That is a fundamental feature of democracy.
On the euro-zone economy:
We have a potential rate of growth and level of productivity that is lower than we should have. It is absolutely clear that if we embark on structural reforms, both would improve. The problem is one of implementation. Central bankers have to explain the need for reform -- and try to persuade people that societies that embrace change are at a competitive advantage.
On the problem of a "one-size-fits-all" monetary policy for the euro zone:
By adopting [one] currency, 12 economies and 12 nations decided to share a common destiny. The Stability & Growth Pact was designed to ensure that the economic and monetary union remains balanced.
On dealing with deflation:
We do not presently perceive any deflationary risks in the euro area. In the presence of a real deflationary phenomenon, which once again is absolutely not the case in Europe, a central bank could legitimately make use of unorthodox monetary weapons. By aiming at an inflation rate below but close to 2% over the medium term, [the ECB] is committed to guarding against the risks of deflation.
On suggestions that the EU's Growth & Stability Pact be amended to allow budget deficits over 3%:
No government, as far as I know, has requested that the text of [the pact] be amended. I am pleased to note this because I believe amending this text, whose main provisions -- and particularly the 3% threshold -- are enshrined in the treaty itself, could undermine the credibility of economic and monetary union as a whole. Ultimately, compliance with the pact boosts confidence and, therefore, growth.
On expanding the euro zone to include nations about to join the EU:
Adopting the euro is an extremely serious affair. Rushing the process without rigorously laying the groundwork would be an error, first for the acceding countries, and for the system.
On the issue of greater transparency at the ECB:
I believe, as does [current ECB President] Wim Duisenberg and all of our colleagues, that the publication of the positions that are taken by each member in the event of a vote on monetary policy decisions currently presents more drawbacks than advantages. We are wary of misinterpretations and errors that could be wrongly [attributed to] the different nationalities of the members of the college.