Central banks ‘stand ready’ to pump liquidity—Trichet

BASEL—Central banks are ready to provide short-term funds to banks, ECB chief Jean-Claude Trichet said on Monday, stressing that the European Central Bank can supply unlimited amounts of liquidity.

Trichet also told Greece to implement the reforms it has promised to reduce its public debt, as markets slumped to new low levelss owing to concerns that Athens would default.

“We stand ready to provide liquidity to banks as required, it is again a sentiment that we all expressed,” the head of the European Central Bank said after a meeting with fellow central bankers.

“In the case of the euro area, we have the capacity as a central bank to provide liquidity on an unlimited basis and at fixed rate,” he added.

Trichet’s statement came as markets fell amid acute tension on Monday owing to alarm that Germany is losing patience with Athens and its budget crisis.

A raft of comments by senior German politicians raising the specter of an “orderly default” for Greece and even an ignominious eurozone exit pushed the euro to a 10-year low.

Stock markets also plunged as the G7 group of rich nations admitted that current economic problems were so complex that a unified response was impossible.

Trichet reiterated a warning to Greece to step up its reforms.

“All Europeans, including the executive branch of Germany … are calling the Greek government to fully deliver on its commitment,” said Trichet.

“The international institutions, the Commission in liaison with the ECB are calling upon the Greek government with great firmness, because it is in the interest of the Greek economy, the people of Greece,” he stressed.