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Eurozone debt crisis not over, says Jean-Claude Trichet

European Central Bank President Jean-Claude Trichet
Image caption Mr Trichet is stepping down after eight years as head of the ECB

Outgoing president of the European Central Bank (ECB) Jean-Claude Trichet has warned the eurozone debt crisis is "not over".

He urged leaders to implement measures agreed at last week's eurozone summit as quickly as possible in an interview with German newspaper Bild am Sonntag.

He added that inflation in the region was likely to be "very low" for the next 10 years.

Mr Trichet steps down on Monday after eight years as head of the ECB.

He will be replaced by the Italian Mario Draghi.

'Time for action'

Last Wednesday night, leaders agreed a strategy to tackle the debt crisis and prevent it from spreading to larger economies such as Italy and Spain, although they admitted that more work needed to be done.

The three main components of the strategy were: banks holding Greek debt would accept a 50% loss, the eurozone bailout fund would be boosted and banks would have to raise more capital to guard against future losses.

Leaders have been heavily criticised for not acting swiftly enough to solve the crisis, and Mr Trichet urged them to implement the measures agreed without delay.

"Swift and full implementation of those decisions is now absolutely critical - now is the time for action," he said.

Meanwhile, Charles Dallara, the head of the Institute of International Finance, has said the vast majority of big banks will accept taking a 50% hit on their holdings of Greek debt.

In an interview with another German Sunday newspaper, Welt am Sonntag, Mr Dallara said he believed more than 90% of banks would participate in the plan.

Rising inflation

Mr Trichet, who has stuck rigidly to the ECB's mandate of controlling inflation during his time at the bank, said the eurozone could look forward to price stability in the coming years.

"In the coming ten years, the inflation rate will most probably stay very low - current expectations are for around 1.8%," he said.

Inflation in the eurozone is currently running at 3% after a sharp rise in September, above the ECB's target of close to, but below, 2%.

The bank was criticised for raising interest rates earlier this year at a time when eurozone economies are struggling with weak growth.

This is in contrast to other central banks, notably the Bank of England, which has kept rates at record lows despite inflation rising to more than 5% so as not to choke off already weak demand in the UK economy.

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