EUobserver / Former ECB chief blames governments for euro-crisis - 1 views
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Former ECB chief blames governments for euro-crisis
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But the 71-year-old French banker said he had warned EU governments of growing economic divergences in the euro area as far back as 2005 and that he had criticised member states, notably France and Germany, for ignoring the deficit and debt rules which underpin the common currency.
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Trichet noted that the ECB intervened on bond markets and bought up Greek debt as early as May 2010, when he was still chief and when the first-ever EU bailout was still being drafted. It interevened again in 2011 to buy Italian and Spanish debt when investors started to bet against the larger euro-states.
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"If we wouldn't have bought Spanish and Italian debt - a move which was highly criticised at the time - we would be in a totally different situation now," he added.
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Turning to Ireland, where the government first used taxpayers’ money to guarnatee all deposits in Irish banks and then had to seek a painful rescue package, Trichet said "nobody advised them to do so."
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Back in 2010, the IMF said Greece could never repay its debt and should write off some of its private and public liabilities. But the EU, under a deal by the French and German leaders, wanted the private sector to take the hit alone in what it called “private sector involvement [PSI],” putting Trichet in a tough spot.
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Despite his actions, PSI came back in a vengeance in Cyprus in 2013, when it was renamed a “bail-in,” and when it saw lenders snatch the savings of well-to-do private depositors on top of private bondholders.