The European Central Bank has a big problem in its hands and it originates from the United States, a former president of the central bank told CNBC Friday.
The growing strength of the euro – which recently broke the $1.
20 benchmark – is raising questions about the future of monetary policy in Europe.
It`s the ECB`s aim to raise core inflation but a strong currency hinders that aim.
According to the former president of the ECB, Jean-Claude Trichet, the bank is in a difficult position given that the core of the problem comes from the U.
"There are a lot of factors (for the euro`s strength).
The real economy in Europe is picking up now very, very visibly," he said about the attractiveness of the euro.
"That being said I think that the U.
difficulty and particularly the hesitation on what to do as regards (with) new investment, as regards (with) taxation and so forth - and the difficulty of the present (U.
) administration are playing also an important role.
Because the problem is more that the dollar is weak vis-à-vis all currencies (rather) than the euro is very strong vis-à-vis all currencies," Trichet told CNBC at the Ambroseti Forum in Italy.
The growing strength of the euro – which recently broke the $1.
20 benchmark – is raising questions about the future of monetary policy in Europe.
It`s the ECB`s aim to raise core inflation but a strong currency hinders that aim.
According to the former president of the ECB, Jean-Claude Trichet, the bank is in a difficult position given that the core of the problem comes from the U.
"There are a lot of factors (for the euro`s strength).
The real economy in Europe is picking up now very, very visibly," he said about the attractiveness of the euro.
"That being said I think that the U.
difficulty and particularly the hesitation on what to do as regards (with) new investment, as regards (with) taxation and so forth - and the difficulty of the present (U.
) administration are playing also an important role.
Because the problem is more that the dollar is weak vis-à-vis all currencies (rather) than the euro is very strong vis-à-vis all currencies," Trichet told CNBC at the Ambroseti Forum in Italy.
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