BERLIN/ZAGREB (Reuters) – Europe’s central bankers said yesterday their governments had at best bought time with a $1 trillion rescue, and called for radical action to curb budget deficits and harsh punishments for those who strayed.
“There is a need for a quantum leap in the governance of the euro area,” European Central Bank (ECB) President Jean-Claude Trichet told Der Spiegel magazine. Echoing his call, ECB Executive Board member Juergen Stark said turbulence in the euro zone would calm down only if member countries reformed their economies and cut their deficits.
“We have bought time, nothing more,” he said in an interview with the Frankfurter Allgemeine Sonntagszeitung.
Euro zone governments agreed a 750 billion euro ($1 trillion) rescue last weekend to end a crisis of confidence in the euro triggered by financial problems in Greece, which had threatened to envelop the region’s much bigger economies.
Trichet said financial markets were in their worst situation since World War Two and possibly even since World War One.
But he indicated that governments rather than currency markets bore responsibility for the euro’s slide, which took it to an 18 month low against the dollar on Friday.
“It is not an attack on the euro,” he said. “It is clear that it is the primary responsibility of the Europeans to take the appropriate measures in order to counter the present severe tensions which have erupted in Europe.”
