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Trichet Warns Of Widening Global Imbalances

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European Central Bank President Jean-Claude Trichet on Sunday raised concern about widening global imbalances after the financial crisis, calling them one of the main challenges for the global economy.

Global imbalances were blamed for contributing to and aggravating the financial crisis and recession that struck the global economy in 2008 and 2009.

"A concern is that after some partial reduction induced by the crisis, global imbalances are starting to widen again," Trichet said according to a speech text for a ceremony, in which he was awarded the Global Economy Prize 2011 by the Institute for World Economy in the northern German city of Kiel.

Such imbalances raise challenges for international monetary and fiscal cooperation, Trichet said, referring to global imbalances as "one of the main challenges facing the global economy and the world community."

Finance ministers of the world's major economies reached a fudged accord in February on how to measure such imbalances after China prevented the use of exchange rates and currency reserves as indicators.

Trichet talks of imbalances in the economy but fails to talk of the all the imbalances created by the worlds central banks printing free cash and allowing even bigger malinvestments, leading to more risk and even bigger imbalances in the financial system.

Still Trichet is a central banker and is clearly a well ahead of the curve we should all look on in awe.

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