BIS Review 7/2010  3  FOCUS: This problem will become even bigger if other countries – such as Bulgaria or Romania – introduce the euro. Trichet: Other European Union countries are indeed committed to joining the euro area. But only when the time is right. As you know, there are strict criteria governing the introduction of the euro, and these must be met in full. And they have to be met not just at a particular moment in time, but on a sustainable basis. The ECB is and will remain extremely vigilant in this respect. FOCUS: But what if new member countries doctor their figures – as Greece did – and trick their way into the euro area? Trichet: Let me be very clear on this. Never again will we accept budget figures that do not reflect the facts. Appropriate auditing must always be possible. As early as next month the European Commission will make proposals that will dramatically improve the relevant framework. This is absolutely critical. FOCUS: Your job and the crisis are both very demanding. Do you have the opportunity at all to see colleagues outside of work? Trichet: Yes, certainly. And that’s important, too, as the high level of mutual trust that exists within the ECB, between the members of the Executive Board and the Governing Council, is in my view absolutely fundamental. FOCUS: Is Frankfurt a good location for meetings outside of your official schedule? Trichet: I think so.
They know that a loss of monetary credibility would be damaging. FOCUS: Nevertheless, if the excessively lax monetary policy in the United States were actually the reason why you needed to raise interest rates in Europe, you would be unable to do so without the US central bank following suit. Trichet: Let me repeat myself. Every central bank has its own responsibilities – in its own economy, with its own particular features, its own different structures and its own different shocks to cope with – and will take the necessary action. I have no doubt that the Federal Reserve, too, is committed to maintaining price stability. FOCUS: Is there some kind of tacit agreement to raise interest rates only jointly? In an interview on CNN, you recently answered the question as to whether the ECB would raise interest rates unilaterally even before the Federal Reserve did so by saying, “I trust that it will also be done on the other side of the Atlantic” (and on the other side of the Channel, i.e. by the Bank of England). Trichet: We all have our own responsibilities, which do not call for the same decisions at the same point in time. I have always said that central banks are united in purpose: the delivery of price stability in their own economies. FOCUS: A basic principle applies to central banks: they take away the punch bowl just as the party gets going. In other words, they increase interest rates. The Federal Reserve did the opposite.