Trichet praises Eurozone watchdog

Europe’s new economic super-watchdog was talked up by European central bank president, Jean-Claude Trichet, yesterday. The European Systemic Risk Board (ESRB), of which Trichet is also president, will single out problems bubbling in individual countries if they pose a risk to the wider system, he said. The ESRB will flag emerging problems, he said, although the body is toothless to enforce its verdicts on individual states. And Trichet warned against the policy of forcing private sector investors to take on some losses from debt restructuring, a procedure known as “haircuts.” Policymakers should simply “apply the programme” of rescue packages, he said. “In the case of haircuts, the short-term investor makes money, the other loses.”