Bank chief threatens first row of new era
Fresh controversy over the leadership of the single currency zone's powerful central bank last night threatened to taint the launch of euro notes and coins. Wim Duisenberg, president of the European Central Bank, which sets borrowing costs in the 12 nation euro-zone, insisted he intends...
Fresh controversy over the leadership of the single currency zone's powerful central bank last night threatened to taint the launch of euro notes and coins.
Wim Duisenberg, president of the European Central Bank, which sets borrowing costs in the 12 nation euro-zone, insisted he intends to remain at the helm for at least another year.
His comments will infuriate the French government, which only supported Mr Duisenberg's original candidacy because of a "gentleman's agreement" that he would step down halfway through his official eight-year term.
That would mean the ECB president standing aside later this year, but yesterday Mr Duisenberg made it clear he does not intend to be pushed. "I've made it known I'll not likely serve the full term but a decision when I will go is my personal decision."
The European commission president Romano Prodi sought to defuse the row but acknowledged the concerns over the issue. "This is something that needs to be agreed on. It is a problem but I don't think it will be a dramatic one."
The behind-the-scenes row over the ECB leadership has been a factor in keeping the euro out of favour on the foreign exchange markets. Since its launch at the beginning of 1999 the euro has fallen from $1.16 to around 89 cents - after hitting an all time low of just over 82 cents last autumn.
The euro has also been hit by concerns about inflexibility of the main eurozone economies and, more recently, by worries that slowing economic growth will make it harder for member states to hit the borrowing targets laid out in the stability and growth pact, with the ECB arguing furiously against any question of backsliding by national governments.
Though governments and the ECB are hoping the launch of euro notes and coins will give the currency a boost, analysts argue the success of the project will hinge on its ability to establish its credibility with international investors.
"The success or failure of the euro will not be measured by soon forgotten possible chaos during its first weeks but by how the currency manages to retain its value," according to Gabriel Stein at Lombard Street Research.
Yesterday Mr Prodi sought to underline the prospects of closer integration within the eurozone without provoking the eurosceptics in the "out" countries - Britain, Sweden and Denmark.
He refrained from urging the "outs" to abandon their currencies and said he did not want to be perceived to be meddling in matters which were not his concern.
However he noted: "I do think the launch of the euro will have an enormous influence on the public in the countries which have not joined."
Last night, government sources said Tony Blair will resist demands of euro enthusiasts to take a stronger lead in overtly promoting the currency now that notes and coins are in circulation.
But ministers will press on with existing moves to promote the benefits of EU membership amid growing confidence that the reality of the new currency will increase a sense of inevitability over British entry.
The Europe minister Peter Hain said yesterday: "People will be able to make a judgment based on facts, rather than myths and prejudice."
Wim Duisenberg, president of the European Central Bank, which sets borrowing costs in the 12 nation euro-zone, insisted he intends to remain at the helm for at least another year.
His comments will infuriate the French government, which only supported Mr Duisenberg's original candidacy because of a "gentleman's agreement" that he would step down halfway through his official eight-year term.
That would mean the ECB president standing aside later this year, but yesterday Mr Duisenberg made it clear he does not intend to be pushed. "I've made it known I'll not likely serve the full term but a decision when I will go is my personal decision."
The European commission president Romano Prodi sought to defuse the row but acknowledged the concerns over the issue. "This is something that needs to be agreed on. It is a problem but I don't think it will be a dramatic one."
The behind-the-scenes row over the ECB leadership has been a factor in keeping the euro out of favour on the foreign exchange markets. Since its launch at the beginning of 1999 the euro has fallen from $1.16 to around 89 cents - after hitting an all time low of just over 82 cents last autumn.
The euro has also been hit by concerns about inflexibility of the main eurozone economies and, more recently, by worries that slowing economic growth will make it harder for member states to hit the borrowing targets laid out in the stability and growth pact, with the ECB arguing furiously against any question of backsliding by national governments.
Though governments and the ECB are hoping the launch of euro notes and coins will give the currency a boost, analysts argue the success of the project will hinge on its ability to establish its credibility with international investors.
"The success or failure of the euro will not be measured by soon forgotten possible chaos during its first weeks but by how the currency manages to retain its value," according to Gabriel Stein at Lombard Street Research.
Yesterday Mr Prodi sought to underline the prospects of closer integration within the eurozone without provoking the eurosceptics in the "out" countries - Britain, Sweden and Denmark.
He refrained from urging the "outs" to abandon their currencies and said he did not want to be perceived to be meddling in matters which were not his concern.
However he noted: "I do think the launch of the euro will have an enormous influence on the public in the countries which have not joined."
Last night, government sources said Tony Blair will resist demands of euro enthusiasts to take a stronger lead in overtly promoting the currency now that notes and coins are in circulation.
But ministers will press on with existing moves to promote the benefits of EU membership amid growing confidence that the reality of the new currency will increase a sense of inevitability over British entry.
The Europe minister Peter Hain said yesterday: "People will be able to make a judgment based on facts, rather than myths and prejudice."
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