European Central Bank (ECB) head Jean-Claude Trichet said on Saturday that the world must coordinate its efforts for more effective debt reduction measures in order to regain confidence for the global economy.

Mr Trichet also told the Group of 20 finance ministers that the euro is a strong and credible currency notwithstanding its recent declines, even tumbling to its lowest value against the US dollar in four years.

Finance minister and central bankers from the world's leading economies have affirmed that recent market disturbances only underscored the importance of a viable and continuing public finances, which must be coupled with fiscal sustainability.

For his part, Mr Trichet said that fiscal retrenchment must be observed and coordinated efforts from governments should lead to confidence building in the financial sector, as he belied some observations that rigid government spending cuts would affect growth and snag recovery efforts.

He said that governments must accept the idea that they are dealing with a global crisis and any measures to address the problem should be done at a global level, as he stressed that "impact on growth could not be considered negative because fiscal retrenchment would restore confidence and help consolidate the recovery."

World markets has so far remained volatile in spite of recent European Union's decision to put up a 750 billion euro rescue package while the ECB has issued pledge to acquire the bonds of ailing markets.

Spain's finance minister Elena Salgado has expressed belief that consolidation in Europe would commence as soon as possible once the economic recovery has transitioned to a self-sustained stage, which should come not later than 2011.

She said that world is watching at this time how the affected economies would be able to cut down budget deficits and steady their finances.

EU Commissioner for Economic and Financial Affairs Olli Rehn clarified that the recent news of a possible sovereign default by Hungary is exaggerated, as he stressed that "any recent comparisons between Hungary and Greece are misleading."

The Hungary issue has so far led to the decline of its currency with its bonds plunging last week, piling up more worries for the EU and ECB.