ECB Tells Banks to Be More Open

Trichet called for banks to be more open and start thinking more in the long-term because this was the only way of "avoiding contagion, herd behavior and ... the propagation of turbulences in times of difficulty."

Major banks have run up billions in losses after many highly rated investments were shown to be based on risky assets U.S. housing loans to people with poor credit.

It is still unclear how far this will affect the real economy as banks shy away from new risk, tighten conditions and raise prices for loans to businesses and home buyers.

Trichet warned that large euro banks are likely to face lower revenue as banks retrench from risk-taking but said the crisis has hit after several years of strong profits left banks able to cope with a downturn.

He repeated a call for banks to "promptly and fully disclose on- and off-balance sheet risk exposures."

Fears that banks are still concealing major losses lead to a bank run on Bear Stearns that saw the bank's fire sale to JP Morgan.

"I would call for a further significant change of culture at the national, European and global level," he told the European Parliament's economy committee. "I would sum up this cultural change with two words: transparency and anti-cyclicity."

More openness was essential to make sure all market players have a clear picture of what is happening while regulators need to look at financial rules that tend to amplify booms and busts, he said.

He also said financial supervisors should tell banks how to value complex investments that may run up huge losses in the wake of the subprime crisis.