The euro is a credible currency, and the euro zone as a whole has better economic fundamentals than the U.S. and Japan, Jean-Claude Trichet, the outgoing European Central Bank President, told TVN-CNBC in an interview Friday.
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Jean-Claude Trichet
"As a currency, the euro is a currency that has kept its value for 332 million people over the last 13 years in line with our definition and in a better fashion than [Europe's disparate currencies did] in the previous 50 years," Trichet said.
One of the biggest challenges for developed economies is to recover the lost credibility of sovereign debt, Trichet added.
"We have really, I think, a global issue of first magnitude which is [to] restore the authority, the creditworthiness of the public signature. It is absolutely of the essence, for the market economy to function as well as possible, [that] you need not to put into question the creditworthiness of the public signature."
The debt crisis has proved that there are weaknesses in the developed economies, and it has caused "very profound lessons to be learned," Trichet said.
"It does not put into question the market economy," he said. "But at the same time we have to make market economies much more resilient because the crisis has demonstrated a level of fragility that is not acceptable."
The current crisis is the deepest since World War II and it could have been the deepest since the First World War "had central banks on the one hand and governments on the other hand not taken very, very important decisions."
European governments should have implemented the EU's Stability and Growth Pact – which lays down the principles for sustainable government debt – but very few of them did, Trichet said.
"I have always said that the Stability and Growth Pact had to be rigorously implemented," he said. "We had a weakness in the implementation of the pact."
"I said myself that I had grave concerns, and at that time [before the crisis started] benign neglect, complacency was the rule everywhere," Trichet added.
The ECB has separated its standard measures to ensure price stability from its non-standard ones, "commensurate to the disruption of markets" and designed for better transmission to markets of the ECB's policy, he said.