Hans T:son Söderström


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The Times, January 7, 1999, Anatole Kaletsky.

WELL, that's it then. The single currency has arrived. Wim Duisenberg, the president of the European Central Bank, has achieved with the touch of a computer key something that defied the legions of Caesar and the armies of Napoleon and Hitler: he has merged the French and German economies and their key governmental functions.

Euro Quoi?

Wall Street Journal Europe, January 7, 1999, excepts

First, European Central Bank chief Wim Duisenberg appeared to renege on what the French government understood to be a private pledge to step down in four years' time so that Frenchman Jean-Claude Trichet could take the helm. Mr. Duisenberg affirmed this week - to charges of betrayal from French quarters - that he has no intention of resigning before the end of his eight-year term.

But that little problem pales next to the indignity of having the new single currency area, of which England is not a part, referred to in English (gasp!)as Euroland.

A full-fledged debate has ensued over what a viable alternative might be. One suggestion was simply to add an 'e' to the end, making it Eurolande. That's more Gallic, you see, because of the French words Irelande and Hollande.

Two of France's most prominent newspapers have declared themselves on the issue. Le Monde has chosen pointedly to stick to the unorthodox Euroland, though apparently not without some acrimony. Le Monde's Lucas Delattre, writing yesterday, pointed out that by using this "decidedly controversial" term without quotation marks, Le Monde risked shocking some of its readers. One of his colleagues, Jean-Pierre Colignon, favored "eurolande" because the version without the 'e' "is too much like Disneyland."

Moreover, opponents of the term pointed out, Euroland first made its appearance in economic reports from "private Anglo-Saxon banks" (four loaded words to be sure), one of them Goldman Sachs. Ah oui, the Americans were behind this.

By contrast, the daily Liberation (whose web site includes instructions of such long-standing French pedigree as "Klikez ici pour votre web convertisseur"), opted to go with the more French-sounding Eurolande which, it observed with politically correct satisfaction, would also be a feminine noun.

But the French government, and the Banque de France, will still have none of this. They have opted for the far-out sounding "zone euro." Our Websters dictionary says that "zone" comes from the Greek, but who are we to quibble. Anyhow, we rather like the idea. Euroland does after all sound like a certain theme park--or, worse, something out of a George Orwell novel.

Americans Welcome the Euro, by Felix Rohatyn, U.S. ambassador to France. Wall Street Journal, January 7, 1999

The euro is more than just a new currency; it is the ultimate expression of Europe's faith in itself. Fifty years have passed since Jean Monnet's dream of a European Common Market began to take shape. In 1978, President Valery Giscard d'Estaing of France and Chancellor Helmut Schmidt of Germany produced a plan that ultimately led to the Maastricht Treaty, the creation of the euro and of the European Central Bank.

The euro is the expression of considerable political will and sacrifice.

In the U.S. we have found a formula that works for us: "popular capitalism." It is a high-growth market economy, budgetary and monetary discipline, a strong legal and regulatory infrastructure and a strong social safety net. The euro, to be a success, may require a European version of this model, or as French Prime Minister Lionel Jospin describes it: "a market economy but not a market society."

There is no precedent for a single currency and a single central bank serving a group of countries without the institutional framework of a unified budget and parallel policies with respect to taxes, social benefits, labor laws, etc. The euro signifies a major act of political will and faith by 11 European countries that are leapfrogging these uncertainties in order to achieve a goal of political and economic integration begun by Jean Monnet 50 years ago.

The U.S. has consistently supported these goals, beginning with the Marshall Plan; we continue to do so today.

The word "credit" comes from the Latin "credere" meaning "to believe." A fundamental belief in the U.S. dollar, regardless of its market fluctuations, stems not only from the strength of the U.S. economy and the soundness of its economic policies, but rests on faith in its institutions. These are legal as well as regulatory; they are political as well as philosophical.

The U.S. is a continent as much as a country, with four or five regional economies, different but complementary. They are tied together by one set of laws, one currency, one capital market and one language. They function within the framework of a political system that is stable and essentially centrist as to economic and social policy. A system that tempers the risks of the marketplace with an extensive social safety net.

These are the standards to which the euro will be compared. The dollar does not exist in a vacuum. It is woven into the fabric of the American political, social and economic system, which give the dollar its credibility.

It will be up to the economic policies under EMU and to the political will of the member countries to weave this into a fabric which, while not a European version of the U.S., will nonetheless have some of its attributes. This would be a mix of a strong market economy, with all its opportunities and risks, combined with intelligent and active governments to provide an ample social safety net,

and European institutions to provide the architecture for the system.

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