ECB chief: Budget cuts and stress tests will restore confidence

5 July 2010

The president of the European Central Bank (ECB) has backed budget cuts and the publication of stress tests on banks as two central policies in the drive to restore confidence in the economic future of the eurozone.

Jean-Claude Trichet said that deficit cuts and austerity drives by European governments are preferable to attempting to spur growth through debt issuance.

"[For] durable growth that is sustainable in the long term, you must strengthen confidence, and that means having budgetary policies that are balanced and sustainable in the eyes of everyone," he went on to explain.

Mr Trichet added that the plans to make the results of stress tests public are another "important element" in regaining the confidence of the markets, reports Reuters.

It has recently been confirmed that publication of the stress test results will take place on July 23rd 2010, with the details of examinations on about 100 financial institutions to be unveiled.

By Claire Archer

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