(CEP News) Frankfurt - The current crisis poses a “serious challenge” to the financial system and policy-makers around the world, European Central Bank President Jean-Claude Trichet said on Friday.

Speaking at the European American Press Club in Paris, the central bank President reiterated the ECB’s goal of price stability over the medium term and stressed that this objective is not limited to setting interest rates.

“We are now providing - and this is quite exceptional - unlimited refinancing to the banks of the euro area for maturities ranging from one week to six months in exchange for eligible collateral,” Trichet said, adding that the central bank will continue to provide as much liquidity as is needed.

The central banker also said financial markets are undergoing further correction. However, he declined to comment on how long this correction will take to run its course. This is an uncertain process, Trichet said. “We are in “uncharted waters…we must stay alert.”

Nevertheless, Trichet stressed that confidence is key to allowing markets to return to normalcy and that the ECB will remain an anchor of stability in the current uncertain environment.

Trichet also reiterated his concerns regarding bringing rates down to zero, saying that while the ECB can lower its main refinancing rate again in March, lowering rates to zero carries “a certain number of inconveniences”.

Written by CEP News European Staff, eunews@economicnews.ca, edited by Stephen Huebl, shuebl@economicnews.ca

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Posted in Categories: Economy, Eurozone, Releases.

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