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2011-10-31 05:59:06
The outgoing ECB president, Jean-Claude Trichet, has said that it is
"absolutely normal" for the European rescue fund to try to find more money
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The president of the European Central Bank has denied that eurozone countries
are going "cap in hand" to China.
On the eve of his departure from the ECB's top job, Jean-Claude Trichet said
the move was "absolutely normal".
The head of the European Financial Stability Facility (EFSF) has been meeting
Chinese officials in an effort to boost the bailout fund.
Mr Trichet hands over the reins of the ECB to the Italian central banker, Mario
Draghi, on Tuesday.
Klaus Regling, chief executive of the EFSF has travelled to Beijing where he is
reportedly seeking a pledge of $100bn from China.
China's President Hu Jintao arrived on Sunday in Vienna for a state visit,
before the crucial G20 meeting in the French resort of Cannes on 3 and 4
November.
Mr Hu's visit to Europe, his second in a year, comes after EU leaders last week
appealed to China to invest in the region's debt rescue fund, to help it
overcome a spiralling debt crisis.
But China's Vice-Finance Minister Zhu Guangyao played down hopes of a
breakthrough at the G20 summit, insisting investment in the European bailout
fund was not on the agenda.
'Benign neglect'
Jean-Claude Trichet, departing head of the European Central Bank As the ECB
President says farewell, he admits Greece should have come under greater
scrutiny.
Mr Trichet's tenure at the ECB, will probably be defined by the sovereign debt
crisis, although for the first half of his eight years in the job, the eurozone
economy grew at a respectable rate, inflation was moderate and the financial
system was stable.
In an interview with the BBC's economics editor, Stephanie Flanders, the
outgoing ECB chief has now said that Greece should have come under greater
scrutiny before it joined the euro.
"With the hindsight they (the governments of the eurozone) should have applied
rigorously the rules that existed in the euro area," he said.
Last week, the French President, Nicholas Sarkozy, said Greece should not have
been allowed to join the single currency in 2001.
Mr Trichet said when Greece was let into the euro club, there was an atmosphere
of "benign neglect".
"The benign neglect, which was the benign neglect of the markets, the benign
neglect I have to say also of the governments, individually and collectively,
let the thing go."
Protesters outside the European Central Bank in Frankfurt 19 October 2011 The
ECB has become a target for protesters as the debt crisis continues.
Some analysts claim the ECB did not respond quick enough to the crisis. Mr
Trichet countered such criticism by pointing out that the ECB was the first
central bank in the world to provide the financial system with liquidity back
in 2007.
Having come to office during a period of relative calm, Mr Trichet hands the
baton to Mario Draghi during the eurozone's biggest-ever crisis.
But Mr Trichet told the BBC that, while there is hard work ahead, the crisis
can be solved.
"We know where we go, but we have to take into account the storms, and we are
in a stormy period at a global level", he said.
Super Mario
His successor will spend his last working day in Rome looking anxiously at the
performance of Italian government bonds and bank shares as markets reopen after
the weekend.
Amid the turbulence on the Italian financial and political scene, the Bank of
Italy is regarded as the one institution that has retained its international
prestige.
Known as Super Mario, Mr Draghi has restored credibility to the bank since he
took over as governor six years ago, after it had been tarnished by a scandal
involving his predecessor Antonio Fazio.
Mr Fazio was accused of insider trading and may still face trial.
Mr Draghi has already warned that the European Central Bank, which has been
purchasing massive quantities of Italian government debt in recent weeks,
cannot continue to do so indefinitely.