We second have to combat pro-cyclicality everywhere in the global financial system, we third have to combat short-termism and we fourth have to very significantly improve risk management in the private sector in general. Moreover, we have to improve surveillance, at a global level, of the economies that are systematically important. It is not only China, the US and Europe, but it is also the other members of the G20, because they are systematically important. If everything is settled as regards the financial system, and if we really go without any taboos in the directions that are presently suggested we can succeed. This includes the 67 measures suggested by the Financial Stability Forum that have been accepted by the international community. But on the other hand, if we maintain the possibility of the global economy having big imbalances that would pile up for years, we know that there will be recurrent corrections which will be equivalent to the earthquake that you have when continents are moving, which at some point leads to a collision. We have to prevent that too. We do not speak too much about that, but it is extremely important. FT: Have the politicians lagged behind the financial markets? Certainly, the technocrats, the central banks understood… The politics has lacked, hasn't it? Trichet: I would not say that. The Central Banks have indeed been instrumental in organising what I would call a line of defense against the “systemic liquidity risk”.
It is certainly not easy to eliminate, otherwise we wouldn't see the same phenomenon in the US and in Europe, but at least we are progressively attenuating the problem. FT: You said last week that you have an opportunity next week to view the operational framework, liquidity regime. You seem to contain a hint that maybe changes might be planned. Can you tell us about that without…? I don't expect you to tell us what you decide, but what would the aim be? Would it be perhaps to apply more whip on banks to encourage…? Trichet: I can say nothing at this stage. FT: What about buying debt, though; buying government debt? Would you consider such a move at the ECB? Trichet: Again, I have said that experience has demonstrated that we had to prepare for unexpected exceptional situations, and I would say that I would not eliminate anything ex ante, and equally I will not pre-commit to anything ex ante. We'll always look at the situation on the basis of our own analysis, taking everything into account. Today, we will certainly not consider that it will be appropriate at all. You were speaking of quantitative measures. There is a measure of quantity, which is impressive today – I'm speaking of both sides of the Atlantic, and both sides of the Channel – which is the size of the balance sheet of the central bank.