Trichet says euro is ‘stable and credible’

The president of the European Central Bank (ECB), Jean-Claude Trichet, spoke to ease fears over the future of the euro on Sunday.

In his reception speech after being awarded the 2011 Global Economy Prize by the Kiel Institute, he said the euro is a "stable and credible currency".

Trichet said global imbalances were "one of the main challenges facing the global economy and the world community", but that the euro area "does not contribute" to them.

Quoting International Monetary Fund figures that show the eurozone to have a relatively stable current account balance, he said "the picture is very different in other parts of the world".

"The euro area current account balance averaged less than 0.1% of gross domestic product over 2005–07 before the global crisis broke out," said Trichet. "Moreover, the euro area current account is still projected by the Fund to be broadly balanced this year and the next, up to 2015."

He stressed his alarm over the emergence of deep imbalances.

"A concern is that after some partial reduction induced by the crisis, global imbalances are starting to widen again," said Trichet. "This raises challenges for international monetary and financial cooperation. The euro area has a significant stake in effective global re-balancing, notably through sounder domestic policies worldwide which, in turn, would contribute to global external stability. The global economy has a lot of homework to do if it is to address these challenges."

Trichet spoke as finance ministers from across Europe held emergency meetings to discuss the crisis in Greece, which is seen as the biggest single threat to the eurozone economy.

The ECB has clashed with governments over a suitable bail-out package for Greece, specifically over the involvement of private sector lenders in the rescue deal.