22:37 GMT +325 September 2018
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    The Euro logo is pictured in front of the former headquarter of the European Central Bank (ECB) in Frankfurt am Main, western Germany, on July 20, 2015.

    Ex-European Central Bank Chief Warns of Possible New Global Financial Crisis

    © AFP 2018 / Daniel Roland
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    Europe's top central banker during the 2008 financial crisis outlined that the current premises could create the same meltdown as ten years ago.

    Jean-Claude Trichet, who ran the European Central Bank between 2003 and 2011, told AFP in an interview that the amount of debt accumulated in the current financial market made the world’s financial system as vulnerable as it was 10 years ago.

    “The growth in debt, especially private debt, in advanced countries has slowed, but this slowdown has been offset by an acceleration of emerging country debt,” said Trichet, noting that this situation could be even more devastating than the financial crisis of 2008.

    He also outlined that there is now agreement that the excessive debt level in the advanced economies was a key factor that triggered a global crisis in 2007 and 2008, thus this is the vulnerability of the markets that could potentially trigger a new economic meltdown. 

    International Monetary Fund
    © AP Photo / Pablo Martinez Monsivais
    The former European Central Bank chief noted that he witnessed the first signs of the upcoming 2008 crisis a year before it happened – in 2007 when there was a complete interruption of the Eurozone money market. "There was none of the usual business, no transactions between banks, no market interest rates," said Triche, outlining that when European banks were looking for 95 billion euros in liquidity to stabilize their economy, the ECB eventually decided to provide the necessary sum.

    Trichet also said that he and his colleagues at the ECB “were very much aware that we were looking at a completely systemic major global crisis” since the bankruptcy of Lehman Brothers, after which many of the market specialists believed that it was just a market correction, not expecting it to be “the detonator for the worst financial crisis since World War II.” 

    READ MORE: By End of 2018, US to Borrow Most Money Since 2008 Financial Crisis — Report

    He argued that he told the American government that the collapse of Lehman Brothers would be devastating yet after understanding that the American government at the time did not have the political leeway to intervene with public money, he prepared for the full-scale catastrophe — and he sees the similar preconditions for it now.

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    financial crash, predictions, crisis, financial crisis, economic crisis, 2008 Global Economic Crisis, The European Central Bank (ECB), Jean-Claude Trichet, Europe
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