Brussels, 12/09/2000 (Agence Europe) - During his regular dialogue (the previous dates back to last June) with the European Parliament's Economic and Monetary Committee chaired by the German Social-Democrat Christa Randzio-Plath, the President of the European Central Bank, Wim Duisenberg, answered in particular questions from MEPs concerning: the continuing depreciation of the Euro; the decision of the Board of Governors on 31 August to, once more, increase interest rates; his absence from the informal Ecofin Council in Versailles. Questioned over this issue by the Socialist Mr Goebbels (Luxembourg), Mr Duisenberg recalled that he had been invited for one year, as sole speaker, to a conference in Canada to which participated around 150 prominent figures (former Finance Ministers, Head of large companies etc.) from the United States and Canada. I had warned as of July, the French Presidency of this situation, but the ECB was not absent from Versailles, it "was there", he said when referring to the presence of the Vice-President Mr Noyer. It may be a good thing to go "sell the Euro" to the United States, he noted, adding: I find unjustified "all that fuss", even if. "emotionally" I can understand it, especially in the light of recent development for the Euro.
In his introductory speech, Mr Duisenberg admitted that recent exchange rate developments, "from a monetary policy point of view they are clearly a cause of concern, because they increase pressure on consumer prices in the Euro area. Furthermore, these development "do not appear to be appropriate when looking at fundamentals" and "are not in line with international balance of payments positions". Following the measures taken by the Board of Governors of the ECB, the prospects for price stability in the Euro area "remained intact", and inflation in the Euro area is among the lowest in the world, added Mr Duisenberg, adding: "the fact that the Euro has continued to depreciate in recent months is not in-line with these strong economic fundamentals of the Euro area". The ECB remain alert towards all risks for price stability, but it "cannot increase the growth potential of the Euro area" this responsibility is that of "other actors". In this context, Mr Duisenberg once more insisted on: a) the wage policy (it is crucial that the next wage settlements are based on the definition of price stability of the ECB and they must resist the temptation to increase salaries de to the increase in oil prices); b) the budgetary policy (one of the main impediments to long-term growth in the Euro area is the high level of social contributions and the taxation of labour and corporate income; c) the reform of the pension systems (which should not be delayed, given the ageing of the European population, even if it is necessary to recognise that there has already been some progress over the last years).
Is the spending power in the Euro area is greater than in the United States? Has the ECB been able to contain inflation better than the Federal Reserve?, asked Mr Goebbles (former Luxembourg Finance Minister) during the debate. Mr Duisenberg answered him: if you want to make such a compliment, I gladly accept it. As for the German Christian-Democrat Mr Von Wogau, who called on Mr Duisenberg what he thought of the interview to the German magazine "Stern" in which President Prodi would have wanted a speech by the European, American and Japanese Central Banks, he
received from the ECB President the usual response to this sort of question: "I can only repeat what I have always said: I shall inform markets and you about intervention after they have taken place and not before".
In response to questions from several MEPs (including Liberal Democrat Mr Huhne) on the subject of the rise in oil prices, Mr Duisenberg remarked: we must temporarily accept the fall in purchasing power that this entails, as well as the deterioration in terms of trade.
Furthermore, Mr Duisenberg answered:
- Mr Schmidt, who asked what the impact of a "no" to the Danish referendum on the euro would be on the confidence of Europeans in the euro. "I do not know. I believe it will have no impact on the confidence of European people in their currency".
- Mrs Villiers (British Conservative), who asked him about the introduction of qualified majority in taxation matters. "it is not up to me to make comments on this subject, even if I am in favour of anything that will facilitate the decision-making process", said Mr Duisenberg, who recalled that unanimity does not come into the statutes of the ECB anywhere, which, in general, decides by simple majority, and in some cases by a qualified majority.
- "If we listen to you, peoples and markets can make mistakes, and you are right", said Mr Abitbol (elected on the Pasqua List). He added: "You can do nothing for the American deficit - petrol is paid in dollars. The only thing you can control is the rate of interest", and your decisions on this subject simply resulted in a fall in growth, mainly in France. "Does the problem come from the pilot, or the plane. Is the aircraft badly designed or the pilot clumsy? Is the only answer in the pilot's resignation?". Mr Duisenberg simply rejected affirmations that the euro would be a failure: we have created a climate of stability and a climate that allows us to anticipate a period of economic growth of over 3% during at least three years, he affirmed.