Prudent fiscal policy will help foster confidence within the euro zone, European Central Bank President Jean-Claude Trichet told CNBC.
“We encourage all countries to be absolutely determined to go back to a sustainable mode for their fiscal policies," Trichet said, speaking after the ECB rate decision on Thursday. "Our message is the same for all, and we trust that it is absolutely decisive not only for each country individually, but for prosperity of all."
“Not because it is an elementary recommendation to care for your sons and daughter and not overburden them, but because it is good for confidence, consumption and investment today," he said.
Following the ECB's decision to extend extraordinary measures, Trichet said the central bank is, in fact, fazing out liquidity support.
"The fazing out process is still proceeding and it is in particular proved by the fact that we have the maturing of the extraordinary measures we have taken in the past, like the 6-month operation and 12-month operation," Trichet added.
"We are really deciding on the measures… we are in the process of fazing out, but we considered that it was nevertheless taking into account all the circumstances necessary to take the decision," he said.
"As you know we are always cautious and prudent even when we have good news," Trichet said. "So it will appear evidently in the eyes of all observers. At the present moment I would say that being permanently alert, what I call credible alertness, is of the essence."