Stable euro will make it dollar alternative, says ECB official

Mumbai, January 25: | Updated: Jan 26 2002, 05:30am hrs
The main thrust of the european Central Bank (ECB) in promoting the euro against the US dollar was to ensure that the currency is stable in the eurozone of 12 countries backed by the economic strength of the region, ECB executive-board member, Tommaso Padoa-Schioppa, said on Friday.

Responding to a quesation on how the ECB is planning to promote the euro to be an alternative currency to US dollar, Mr Padoa-Schioppa said: “We have to make it a stable currency in the strong economic environment of eurozone, besides promoting it as a stronger currency outside this zone”.

He hastended to add that “however, we have no plans to promote the currency through publicity”.

Mr Padoa-Schioppa is on a two-day visit to Mumbai to further the bilateral relations between the ECB and Reserve Bank of India (RBI).

This is on the similar lines in which ECB is developing bilateral relations. “We have discussed issues of common interest like monetary economic scenario in the global context and co-operation between the ECB and RBI,” he added.

During his stay in the city, Mr Padoa-Schioppa met with RBI governor Dr Bimal Jalan, visited the National Stock Exchange (NSE) and the Bombay Stock Exchange, the Indira Gandhi Institute of Developmental Research (IGIDR), a research institute established by the RBI.

Stating that the economy of the eurozone (with twelve countries who joined the European Monetary Union) has slowed down during 2001,

Mr Padoa-Schioppa said recovery is, however, expected during the current year.

“Conditions for recovery are there as there are no major imbalance in the zone that calls for corrective measure. To accelerate further growth structural reforms are being initiated.

‘‘The move is expected to add flexibility to usage of factors of production,” he added.

Mr Padoa-Schioppa was of the view that entry of the UK into the European Monetary Union (EMU) would not affect the strength of the euro in any way.

He also said that lack of homogenity among the member countries now may cause some hardships on pricing and trading front, but that could be corrected in medium term.

“We expected some problems to crop up in the process of establishing the monetary union, but no major problems have been identified after the launch of the physical currency,” Mr Padoa-Schioppa said.