PROFILE:Jean-Claude Trichet has has steadfastly stressed the European Central Bank's independence, writes ARTHUR BEESLEY, European  Correspondent

IT WAS after midnight in Brussels when Jean-Claude Trichet took the podium to speak to reporters at the end of a recent EU summit.

The European Central Bank (ECB) chief said he would take only three questions, but he answered many more, addressing his interlocutors with a curt “Sir” or “Madam”, and was still holding court as 1am approached.

This is wholly characteristic of Trichet, indefatigable steward of the ECB, who has battled the euro sovereign debt emergency with radical ad-hoc expansions of the bank’s remit. Never a man to shirk a U-turn if convenient, he has rewritten the rules several times over and swallowed unappealing compromises as Europe’s leaders grappled with an existential threat to the single currency.

The firefighting has stretched the EU system to its legal and political limits, exposing deep fissures between Berlin, Paris and Brussels over the merits of intervention and its scope.

From his base in a drab Frankfurt tower block, however, Trichet upped the pace at decisive moments with demands for fresh political action to mitigate the danger of other euro countries meeting the fate of Greece.

On this decidedly activist path, he has steadfastly stressed the ECB’s independence, facing down strident demands to bow to the will of French president Nicolas Sarkozy. The Élysée Palace might have expected more from a man who was twice governor of the Banque de France, but that’s not Trichet’s style. Servile and obsequious are not adjectives that match his unflinching self-confidence.

At 67, Trichet is nearing the end of a long public service career. He shows no sign of wanting for stamina, criss-crossing the globe at a rate that would tire men half his age. “He was very concerned about the situation,” says an associate. “You could see it in his face. There were times when he felt he was the only one concerned.”

The debt debacle appears to have stabilised somewhat since EU leaders agreed with the IMF two months ago to set up a €750 billion backstop for distressed euro countries. But the air of crisis has not lifted – the situation remains fluid, prone to shock – and important challenges loom. Although the publication in a fortnight’s time of stress-tests on 91 European banks is designed to remove unwarranted suspicion from institutions with little exposure to the debt debacle, the process has potential to raise serious credibility issues for the EU authorities.

If the tests are not severe enough – with assumptions of sovereign default taken into account – they could be self- defeating. Instead of reassuring markets, they could have the opposite effect. With the ECB tied into what is a very public process, the pressure is on to ensure maximum rigour and transparency.

At a press conference yesterday, however, Trichet expressed confidence in the process. “As has been done in the past – on the other side of the Atlantic in particular – we are trying to identify the risks that help us to have a correct appreciation of extreme cases where there is a strong deterioration of the situation.”

There's nothing in that to counter the sense that certain European banks will be publicly exposed as light-winged in the capital department, with consequent pressure for public recapitalisations. This explains German resistance to a process that casts unwelcome light on frailty in its landesbanken– and prolonged backroom haggling over the parameters of the process.

With weakness in Spain's beleaguered cajasalso likely to be exposed, vulnerabilities in British banks may also surface.

The tests are but the latest in a long line of manoeuvres to gain the upper hand in an emergency that has already consigned Europe’s once-sacred no-bailout clause to history. Of significance here is that the tests have the effect of temporarily shifting attention towards the institutions that might be compromised by sovereign and property market weakness – as distinct from the sovereigns themselves.

The ECB’s strategy in recent months has been to contain the Greek crisis and avert the threat of contagion from other debt- reliant countries such as Spain, Portugal and Ireland. Dublin remains in the ECB’s focus, notwithstanding Trichet’s positive commentaries on the Government’s efforts to bring the public finances to heel.

Indeed, the sense at present is that the ECB’s overarching aim in the malaise is to draw a dividing line between Greece, Spain, Portugal and Ireland on one hand and all other euro countries.

Any call on the €750 billion rescue net from Spain, for example, would herald grave danger for the other weaklings. A loss of market confidence in Italy, however, could be catastrophic for the wider currency union. Such are the concerns in Frankfurt almost three years after the credit crunch caused a series of tectonic shocks to global markets. At its core, there were two strands to the ECB’s response: to open up huge liquidity supplies to banks that no longer trusted each other; and to bring interest rates down.

While the ECB was already embarking on its exit strategy when Greece stunned markets and the European authorities with a drastic upward revision to its budget deficit, the period since then has been marked by massive public interventions in the markets. These have seen Trichet do a number of things he would rather not do: accept the IMF into the euro zone milieu; treat Greek debt differently from the debt of other sovereigns; and buy government debt in the euro.

As befits a central banker who learned long ago to be careful with his words, the most Trichet has said is that there is but “one decision” whenever the ECB governing council meets.

Even so, the effort brought the ECB into new territory yet again by becoming a buyer in the market for sovereign debt. But it seems the rulebook is revised every week at this point.

As the ECB held its core interest rate at a historic low of 1 per cent, Trichet expressed cautious optimism for the European economy and decried excessive market pessimism.

Progress perhaps, though the battle is not yet won.