ECB president Jean-Claude Trichet has moved to calm jittery financial markets by calling the euro 'credible' and agreeing to continue the bank's emergency bond-buying program to prop the struggling eurozone.
ECB president Trichet sees no euro currency crisis
Rising to the defence of the euro, Jean-Claude Trichet, the president of the European Central Bank, described the euro as a "credible" currency.
"There is no crisis for the euro as a currency," Trichet said Friday in a radio interview on France's RTL radio network. "We have problems of financial instability that are the result of budget crises in certain European countries."
Essential for investor confidence
Trichet added that the central bank has the "same message" for all countries - namely, to "take all measures to make next year's fiscal objectives credible." He said such action is essential for investor confidence.
The European Central Bank isn't budging on interest rates
The ECB also left its key interest rate at a record low 1.0 percent. Trichet said the decision to leave the rate unchanged was necessary to continue providing "price stability." The rate was set in May 2009.
Asked whether the shift to fiscal consolidation could push eurozone countries into a recession, Trichet replied: "I don't think so."
On Thursday, the ECB conceded emergency support to troubled eurozone countries was still needed. The announcement came just months after the central bank indicated it would wind down the program.
But it stopped short of more aggressive action to contain the debt crisis, which has already engulfed Greece and Ireland.
Financial markets had hoped to see a significant increase in the bond-buying emergency program.
Trichet must balance a number of opposing forces, such as economic growth. Growth in Germany, for instance, has been better than expected, contrasting sharply with results in weaker countries.
Author: John Blau (AFP, Reuters)
Editor: Cyrus Farivar