The head of the European Central Bank rejected Saturday criticisms of the euro by some Germans, telling a mass- circulation newspaper that the euro was a more stable currency than Germany's old Deutschmark. "In the past 12 years, the average rate of price increase in the eurozone has been 1.97 per cent, and in Germany only 1.5 per cent," Jean-Claude Trichet said in remarks quoted by the paper Bild. "Those are better numbers than for the 50 years as a whole before the euro."
The ECB president said the common currency had proved "credible and stable" during the debt crisis. He was responding to nostalgia recorded in recent polls showing a significant number of Germans still long for the Deutschmark, which was retired at the start of 2002. He said the fiscal deficits of the eurozone as a whole during 2011 would be only half as big as in Japan or the United States. All industrialised nations, he added, currently have budget problem.
"This fact is often forgotten," said Trichet. But he urged eurozone governments to slash spending harder. "The ECB is expecting governments in the eurozone to make enormous efforts to reduce debt." Trichet said there was no crisis of the euro as such. "It's rather that we have a crisis of public finance in some nations.
States that had spent more than they earned had to act. "Debts must be repaid. This is an issue of trust," he said. On Thursday, Trichet had warned about the risk of rising inflation, as a result raising market expectations that an interest rate hike would come about eventually. But the ECB left its benchmark refinancing rate on hold at its historic low of 1 per cent.