Europe weighed in at the central bankers conference in Jackson Hole, Wyo, on Saturday, with the president of the European Central Bank and president of the International Monetary Fund (IMF) calling on governments to do more to address the deteriorating world economy.
"The downside risks to the global economy are increasing," Christine Lagarde, president of the IMF and former French minister of finance, said during a joint appearance with Jean-Claude Trichet, president of the European Central Bank.
Economic risks "have been aggravated further by a deterioration in confidence and a growing sense that policymakers do not have the conviction, or simply are not willing, to take the decisions that are needed," said Lagarde
Trichet avoided any mention of the European debt crisis that threatens the stability of the global financial system and may define his eight-year tenure, which ends on October 31. Nor did he mention the extraordinary measures that the central bank has undertaken recently, buying Italian and Spanish bonds on the open market to contain runaway borrowing costs.
Instead, he suggested that Europe's problems are fundamentally a question of which governments have taken steps to become competitive and which have not.
"Greece, Portugal and Ireland, in particular, had progressively lost competitiveness vis-à-vis their main trading partners in the euro area," said Trichet. "Germany is now an example of how big the dividends of reform can be if structural adjustment is made a strategic priority and implemented with sufficient patience."
The New York Times