Trichet Warns against Sowing Seeds of Future Crises

Policymakers must avoid sowing the seeds of future crises and make sure efforts to revive the economy have a clear exit strategy, European Central Bank President Jean-Claude Trichet said on Monday.

In a speech to European parliamentarians, Trichet urged governments around the world to keep a medium-term view focused on securing financial and economic stability.

"Our primary and most immediate task as policymakers is to help resolve this crisis, in cooperation with the private sector," he said, calling for better regulation to address the causes of the financial market mayhem.

"And yet, we also need to make sure that our decisions today do not lay the ground for similar disorder in the future," he said.

Trichet said wise policy actions should include an exit strategy, which would be introduced quickly when the economy recovered and should encourage structural reforms as well as boosting domestic demand in the short-term.

The ECB has cut interest rates by 2.25 percentage points to 2 percent since last October but benchmark euro zone rates remain higher than those in other developed economies.

Euro zone governments have also announced extra spending to stimulate their national economies, along with governments around the world as the global economy falters.

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