FRANKFURT — Although it is too early to say the crisis is over, it is time to withdraw some of the policy measures that supported the financial system through the credit crunch, European Central Bank president Jean-Claude Trichet said Friday.
In a speech at the European Banking Congress in Frankfurt, Trichet likened the financial system to a recovering patient and said it was time to pull back the medicine “if the patient is to get back on its own feet.” He said the central bank soon would be pulling some of its liquidity-providing “extraordinary measures” to ensure they don’t cause an inflation threat. The bank is expected to provide details on scaling back the programs at its Dec. 3 meeting.
He said the financial system had to prove that it could work without the bank’s help, and that policymakers should be wary of repeating mistakes of the past, when very cheap credit helped create dangerous imbalances.
“It is surely too early to say the crisis is over,” Trichet said, but it is time to look to the future and learn from the past.
Trichet called on banks to make more credit available and to bulk up their reserves with their quarterly profits if necessary.
Bonuses, he said, also need to be kept in check.
The chief of the central bank for the 330 million citizens across the 16 countries that share the euro said taxpayers wouldn’t accept another round of bailouts.
