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Former ECB president warns of a new financial crisis

Collected: 2023.09.21

Distributed: 2023.09.22

Source: Go Direct

Former European Central Bank (ECB) President Jean-Claude Trichet delivers a keynote speech at the G20 Global Financial Stability Conference held in Seoul, on Sep. 20. [Photo by Yonhap]

Former European Central Bank (ECB) President Jean-Claude Trichet warned Wednesday that there is a risk of a new financial crisis emerging in the most vulnerable countries or sectors, citing the prolonged high interest rate environment and surging debt levels.

Trichet’s remarks were made in a keynote speech he delivered at the G20 Global Financial Stability Conference in Seoul. The conference was co-hosted by the Ministry of Economy and Finance and Korea Development Institute.

Trichet noted that the total debt of public and private sectors worldwide accounted for 238 percent of the global gross domestic product (GDP) in 2022, up 229 percent from three years ago.

He added that the concern is that debt-related issues, which is the biggest risk, are persisting alongside high-interest rates and geopolitical risks.

Trichet also emphasized the importance of global efforts to stabilize inflation.

It is crucial for many countries around the world, including Korea, to bring inflation back to stable levels, he said, noting that the experiences of the 1970s and the early 1980s show that once inflation gets out of control, it is very challenging to bring it back under control, and requires dramatic measures.

He agreed with international financial institutions that central banks and governments should move in sync to contain inflation at reasonable levels.

By Lee Hee-jo and Yoon Yeon-hae

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