Chairing the first meeting of the European Systemic Risk Board (ESRB), Europe’s proposed solution to avoid a repeat of the recent financial crisis, Trichet faced a barrage of questions about the new body’s purpose and authority.
The watchdog has no formal enforcement powers. It is designed to take an overview of Europe’s financial system and highlight emerging problems for relevant authorities to act on.
If the ESRB is not satisfied, it has the option of going public with its fears and leaving the rest to the persuasive powers of financial markets.
“Authority is not to be taken for granted, you have to gain it of course and I think it is the strong determination of all those who participate in the board to demonstrate and gain authority,” Trichet told a news conference after the meeting.
The watchdog brings together the continent’s top central bankers, seating them on a 37-member board alongside the heads of banking, trading and insurance authorities and EU economic and monetary affairs commissioner Olli Rehn.
ESRB vice-chair, Bank of England governor Mervyn King, said the first meeting was about getting the new body going.
“The purpose of today was to put in place the building blocks,” he said.