Exclusive Trichet interview: It is time for banks to start lending again
Q: The ECB is accepting an increasing array of securities as collateral from Europe’s banks in an effort to get them lending again. What pressure is this putting on the size and quality of your balance sheet?
A: All central banks in the industrialised world have been called upon to take exceptional decisions. Today we are supplying unlimited liquidity at fixed rates on a one-week, one-month, three-month and six-month basis. We have recently enlarged the eligibility criteria for collateral.
Our balance sheet is about 55% larger than it was 12 months ago. This of course is a huge leap that emerged more or less in all central banks of the industrialised countries.
Everything that we have done is aimed at enabling financial markets to function normally again.
Q: Do you have a timescale in mind for when you might begin to manage down your balance sheet?
A: I should point out that we are constantly trying to improve our own risk management taking into account the fact that we take more potential risks on our collateral, and we have already made public a number of measures in that direction that will be implemented next year.