European Central Bank President Jean- Claude Trichet called for a global approach to solve the financial market crisis.

''Public authorities must be alert, decisive and effective at a global level,'' Trichet said in a speech at the Economic Club of New York. For its part, the ECB will consider the materialization of downside risks to economic growth ''and particularly as regards the influence that it has on the upside risks for price stability,'' he added.

The initial lack of a coordinated response to the credit crunch by policy makers culminated last week in the biggest stock sell-off since 1933. Now central banks are acting more in tandem, cutting interest rates last week and agreeing to flood the financial system with dollars. Money-market rates in London fell today after the US joined European governments in offering to buy stakes in banks to restore confidence.

''We are doing and will continue to do everything that is necessary to supply the requisite liquidity while preserving the solid anchoring of inflation expectations,'' Trichet said. ''It is time for us all to take action -- the private sector as well as public authorities at the global level.''

'Morph to Pragmatism'

The world's biggest financial companies have posted more than $US635 billion in writedowns and credit losses since the start of last year. Commercial banks refused to lend to each other after the US housing slump caused the collapse of New York-based Lehman Brothers last month.

''The events of the past three weeks show that political differences can morph into economic pragmatism,'' said Lena Komileva, an economist at Tullett Prebon. ''The focus on domestic problems has not crowded away the need for global containment of the crisis.''

The world's largest central banks decided yesterday to offer financial institutions unlimited dollar funds. As part of its efforts to soothe money markets, the ECB last week also changed its auction procedures and said it will lend banks as many euros as they can provide collateral for at the benchmark rate of 3.75%, rather than at a higher rate determined by demand.

''We will in my opinion, thanks to all the decisions that have been made, master the situation quite well with the help of the private sector,'' Trichet said.

Bloomberg