Jean-Claude Trichet: A rich variety of cultures at the heart of Europe Interview with Mr Jean-Claude Trichet, President of the European Central Bank, in the Frankfurter Allgemeine Zeitung special supplement of the ECB Cultural Days, published on 4 October 2009. *  *  *  1. The ECB Cultural Days have been held seven times since their launch. On three occasions, they have featured countries from eastern Europe. What does eastern Europe bring to Europe and to Frankfurt, in particular? It is very important for the ECB – with our staff coming from all 27 EU Member States – to discover or rediscover the wealth of European culture in the international environment of Frankfurt and its surrounding area. As you say, it has always been our aim to embrace the whole of Europe, both the old and new members of the European Union. It is no accident that we have welcomed three central and eastern European and three western European countries. Last year, on the occasion of the tenth anniversary of the ECB, the events involved all 27 EU Member States in order to underline the diversity of European culture. This year, the 20th anniversary of the fall of the Iron Curtain, the event takes place against the unique backdrop of the reunification of Europe. 2. You made a speech on European culture in Frankfurt this spring, which explored the link between the concepts of roots, diversity and identity. Did you have the ECB Cultural Days in mind? Of course.
In my book, this is not only bad for the needed cyclical recovery in aggregate demand. I suspect that it will impede the rebalancing of the economy’s productive capacity. Firms wishing to enter or expand export markets, or compete against importers, often need credit. Finance is the oil that lubricates the allocation – and so, in current circumstances, reallocation – of capital in our economy. This is manifestly affecting SMEs. My hunch is that housing market conditions are a factor too. As long as anyone can remember, a crucial element of SME finance has been the capacity of entrepreneurs to pledge their home at the outset of a loan or, contingently, if and when their business hits choppy waters. Uncertainties about the path of house prices do not make that a comfortable backdrop for lenders in current conditions. 2  BIS central bankers’ speeches  Rebalancing will affect labour market conditions too. Perhaps the greatest surprise to the MPC over the past few years has been subdued productivity growth. One could think of this as firms maintaining employment at higher levels than would have been predicted given the fall in the level of output. Labour hoarding. That squares with business managers explaining that they worry about “structural” skill shortages and so are loathe to lose employees who they will need when their markets recover. But it does not really square with surveys of business conditions reporting that firms say they are carrying relatively little spare capacity. We have scratched our heads about this.