Trichet: ‘Banks will not forget that their job is to lend’

The European Central Bank’s president knows that confidence must be restored before markets begin to function normally again. But he believes that the concerted action of central banks and governments means financial institutions should now be preparing to restore normal lending and borrowing relationships.

Trichet’s balancing act

‘Let’s stick to the rules’

More on Jean-Claude Trichet

"We call upon the top management of the commercial banks to take these decisions into account and recognize that they are operating in an environment in which a lot of the fundamental risks to liquidity and solvency have been addressed"

At what specific moment did you realize that we were in a financial crisis of unprecedented magnitude?

On August 9 2007 we were the first central bank to identify that we were starting to see a hugely turbulent period as a consequence of abnormal behaviour in financial markets. That day we lent €95 billion for 24 hours to the market at a fixed rate.

Before this, we had said publicly already back in 2006 – as did other central banks – that global financial markets were under-assessing the quantity of risk and underpricing the unit of risk, so that there was a need for a correction.