European Central Bank President Jean-Claude Trichet urged the 16 countries using the euro to slash their deficits "in 2011 at the latest," in an interview published Sunday.
"In the eurozone, budget deficits should be reduced in 2011 at the latest, in some countries already in 2010, to preserve faith in state finances," he told the Bild am Sonntag newspaper. "In Europe and around the world, there are lessons to be learned from the financial crisis to make the financial system more resilient."
He urged banks to help ease a credit crunch by making loans available. "Banks must live up to their central role in providing credit to the economy," Trichet said. Greece, which is also a member of the eurozone, saw its sovereign credit rating downgraded this month due to a ballooning public deficit and debt.
Its debt is now estimated at 300 billion euros (430 million dollars), three times the size of Germany's, which is the biggest eurozone economy.
Athens' public deficit is likely to rise to 12.7 percent of output this year, far exceeding the limit of 3.0 percent for countries that use the single European currency.
The crisis has roiled markets and pushed down the value of the euro. Meanwhile this month, German Chancellor Angela Merkel's cabinet approved the 2010 budget, which foresees a record 85.8 billion euros in new debt next year.
The government has said it will unveil a major savings plan by mid-2010 to put the country back on the road to fiscal health following heavy public spending to fight the global financial crisis. It aims to reduce the structural deficit from 2011 by around 10 billion euros per year.
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