ECB's Trichet: G20 must tackle global imbalances

FRANKFURT (Reuters) - The Group of 20 rich and developing nations must tackle global economic imbalances in its new role as the key international policy forum, European Central Bank President Jean-Claude Trichet said in comments released on Sunday.

Trichet told Italy's Corriere della Sera newspaper that the G20's new role, backed up by advice from the International Monetary Fund and the Financial Stability Board, would allow a good combination of expert analysis and peer pressure.

"It is particularly important that the G20 is designed to be the premier forum for international economic cooperation," he said, according to an interview transcript published on the ECB's Web site on Sunday.

"The G20 has to address the issues of the domestic large imbalances between savings and investments, and of the set of unsustainable external imbalances.

"We know that these imbalances have been at the roots of the present difficulties. If we don't correct them, we'll have the recipe for the next major crisis. And this of course would be totally unacceptable."

Trichet said central bankers appreciated G20 leaders' commitment to fiscal responsibility and their comments in Friday's Pittsburgh communique that a sense of normalcy should not lead to complacency.

Failing to wind back public stimulus programmes at the right time would damage confidence and delay recovery, he said.

"One thing is sure. When time comes, systemic economies are not credible in going back to sustainable fiscal policy in the mid to long run," he said.

"We won't have the recovery which we are hoping for. Because governments would not inspire confidence to households and corporate business. It is the evaporation of confidence that created this dramatic turmoil. Now we have to do everything to rebuild confidence."