Paris (AFP) - Too much debt has made the world's financial system as vulnerable as it was 10 years ago, Europe's top central banker during the 2008 global meltdown has warned as he looks back on the crisis.
"There is now agreement that the excessive debt level in advanced economies was a key factor in the triggering of the global financial crisis in 2007 and 2008," Jean-Claude Trichet, who ran the European Central Bank between 2003 and 2011, told AFP in an interview.
"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, a Frenchman who ran his country's central bank, the Banque de France, before taking the helm at the ECB.
"This makes the entire global financial system at least as vulnerable as it was in 2008, if not more so."
Trichet was only the second president at the ECB, which was barely a decade old when US bank Lehman Brothers collapsed in September 2008, a date widely seen as the trigger of the global crisis.
- 'Unheard of since WWII' -
But Trichet said the bank had detected big trouble much earlier.
"I witnessed the real start of the financial crisis that was about to sweep the world in the morning of August 9, 2007, when we were confronted with a complete interruption of the eurozone money market," he remembered.
After claiming its first bankruptcies in the US in the summer of 2007, the budding crisis quickly made world stock exchanges wobble too.
The contagion reached Europe when German bank IKB issued a profit warning, prompting the German government to extend it a lifeline of more than three billion euros...