European Central Bank President Jean-Claude Trichet said Friday in an interview on the FOX Business Network that the European Union supports Greece and that troubled country’s austerity measures.
“Europe is united in its support for Greece,” he said in an interview from the Economic Summit at the Stanford Institute for Economic Policy Research in Palo Alto, Calif.
Moreover, Trichet said he and other European fiscal policy makers believe that Greece's proposals will convince global markets that Greece is "moving in the right direction."
Greece is deeply mired in debt and its proposed cuts to public employee benefits among other spending reductions have led to strikes and violent uprisings in that Southern European country.
European fiscal leaders on Friday were reportedly on the brink of an agreement to bail out Greece in an effort to shore up the continent’s single currency, the euro.
Trichet said Europe has no intention of pushing the euro as a replacement for the dollar as the world’s primary currency.
“We did not create the euro against the dollar,” he said. “The euro is for Europe.”
Also in response to a question on a proposed European monetary fund, Trichet said a proposal forwarded by German academics deserves an examination although he was non-committal in his support.
Trichet was also hesitant about blaming Greece’s problems on speculation in derivatives, or securities whose value is based on the value of something else.
Greece’s Prime Minister George Papandreou, in the U.S. this week, said speculative trading by big Wall Street banks in derivatives tied to European debt helped dig the hole Greece now finds itself in.
“This is an important problem,” Trichet said, adding that any global fiscal reforms must ensure that “we have a more stable system than we had before. We have to be fair, look at the system as a whole.”
Trichet praised U.S. fiscal leaders, specifically citing the staff at the Federal Reserve, saying their moves during the worst of the economic crisis prevented a far worse scenario from playing out.
