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Update: ECB Trichet: Reiterates Importance Of Strong U.S. Dollar

PARIS (MNI) - European Central Bank President Jean-Claude Trichet Friday restated his view that it is important the dollar remain a strong currency, and he once again highlighted comments to that effect by leading U.S. financial authorities.

"I repeat very strongly, as [U.S. Federal Reserve Chairman] Ben Bernanke and [U.S. Treasury Secretary] Timothy Geithner have also said, that it is very important the U.S. dollar be a strong currency - a currency of confidence," Trichet said in an interview with French radio station France Inter.

Trichet also said the ECB is "not dogmatic," but is faithful to its mandate, which is to preserve price stability. The citizens of Europe "can be confident that we will not let inflation get away from us," he said.

He reiterated, though less bluntly than he had Thursday at his monthly press conference, that Greece cannot look to the ECB for special assistance. "It must do its own work, work at home if you will," Trichet said. "And it's a big job."

Trichet said certain types of financial behavior, and particularly excessive bonuses and other remuneration, must be altered in the post-crisis world. But invited by his interviewers to match the language of US President Barack Obama, who on Thursday called the recent return of big bank bonuses "obscene," Trichet declined.

"I am a central banker, not a politician," Trichet quipped.

He later warned against blaming the financial crisis on banks. "I'm not in favor of the idea of a scapegoat," he said. "The whole system malfunctioned," including bank, non-banks, rating agencies, and regulation. "The whole system was very fragile and this fragility is unacceptable," Trichet added. "There is an extremely strong consensus no longer to accept this fragility."

The ECB chief said that the central bank and all its constituent national central banks are sending a "strong" message to banks that they must get their balance sheets in order and be in a position to "do their job," which is to lend to households and businesses.

Despite some weak spots, "overall, banks, happily, are concentrating on the real economy," he noted, particularly households. He noted as he has several times already that loans to households in the eurozone are rising again, though not yet for businesses.

Trichet was asked by one caller why the ECB wouldn't just lend directly to individuals, since the cheap money it is providing commercial banks is being loaned back out at "usorious" rates, or not at all.

"Central banks do not lend directly to individuals," Trichet replied, noting that it is totally normal for commercial banks to make loans to end users at rates of interest that are higher than what they paid for the money.

Nonetheless, market "interest rates have very, very much decreased," Trichet noted. Asked by one of the interviewers if he didn't think rates were still too high, he said, "I wouldn't say so at this point."

Trichet said that despite the crisis and the challenges of overcoming it, he saw a broad consensus worldwide that the free market system "is the best way to create wealth."

But he urged everyone, individuals and institutions, to do their part to foster a recovery and the return of confidence. The system must be fixed, he said, because the democracies will not intervene so massively a second time around to rescue it.