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Duisenberg keeps markets guessing - EMUbusiness - Issue 17

18 April 2001, 10:33 CET


EMUbusiness - Issue 17
18 April 2001
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Publisher's Note
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'Steady as she goes' seems to be the message from the European Central Bank, which, contrary to the expectations of many analysts, left its interest rates unchanged earlier this month. While conceding that inflationary pressures are easing and the growth in money supply is finally approaching the reference level to which the Bank has doggedly stuck even though monetary and credit growth for a
long time obstinately refused to stay in line, the Bank is
nevertheless playing safe. It appears to feel it has the ship on a stable course providing Member States do their bit in terms of structural reform and unions hew a moderate line on wages. On the other hand, it appears to regard the waters in which it is sailing as still too uncharted to take any risks even while interest rates are coming down all around. Unlike some of his peers, ECB President Wim
Duisenberg appears to be a man who likes to keeps the markets guessing. And that applies not just to interest rates, but also to his own future.

Regards,
Marion Bywater
Publisher, EMUbusiness
mailto:mbywater@eubusiness.com

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1. French start to spend hoarded notes
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French francs traditionally stored 'under the mattress' appear to be coming out of their hiding place as the time to replace them with euro approaches. According to the French Banking Federation, businesses are reporting that more FF500 notes are being used for payment than they are used to. This anecdotal evidence is confirmed in fact by figures from the Bank of France on money in circulation.
Full story: http://www.eubusiness.com/item/44142


2. SNS Bank changes euro charging structure at Commission behest
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The European Commission has dropped SNS Bank of the Netherlands from the list of banks and banking associations in seven euro-states who are being investigated for possibly operating national cartels to fix charges for exchanging eurozone currency notes. SNS Bank, which is
part of the SNS Reaal banking/insurance group and has its roots in the savings banks and trade union sectors, has promised to set its tariffs independently of other Dutch banks. It will also abolish its minimum fee from May 1 and provide the service free of charge for its accountholders as from next October. The Commission believes this will provide a cheaper, competitive service for customers ahead of the summer holiday period.
Full story: http://www.eubusiness.com/item/44144


3. Eurosystem to look more closely at innovations in payments systems
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The Eurosystem intends to extend its oversight of payment systems to structures which serve the same purpose but have not conventionally been regarded as payment systems. This will include correspondent banks and innovative systems using new technologies which are outside traditional banking and payments channels.
Full story: http://www.eubusiness.com/item/44148


4. Irish economy starts to cool
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The risk of Ireland's economy overheating is not as great as some commentators had thought, Ireland's Finance Minister, Charlie McCreevy, has told the Economic and Monetary Affairs Committee of the European Parliament. Consequently, by implication, the reprimand issued by the Council of Ministers for breaching the Broad Economic
Policy Guidelines has been overtaken by events. Recent changes in the macro-economic environment have reduced somewhat the relevance of concerns that Ireland's last budget was too pro-cyclical, McCreevy claimed.
Full story: http://www.eubusiness.com/item/44151


5. Duisenberg keeps his counsel
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ECB President Wim Duisenberg is still refusing to say when and whether he will step down despite recent press reports that he is under pressure to name the day in the interests of a stable handover. It was widely assumed when he was appointed in 1998 that he would serve only four years of his eight-year term in order to hand over to French Central Bank President, Jean-Claude Trichet. But that was an over-simplified account of the deal that was struck in May 1998, and Duisenberg seems intent on keeping people guessing.
Full story: http://www.eubusiness.com/item/44152


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These articles are provided by Euro-impact. Euro-impact is a monthly newsletter on the regulatory, practical and strategic impacts of the euro for companies. Articles may be reproduced with acknowledgement of the source and Euro-impact. Every reasonable effort has been made to ensure the information is correct at the time of writing.
http://www.euro-impact.com
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Coming up in euro-impact
French SMEs start to get the message; Commission, Germans encourage reverse dual price display, Portuguese mandate it; Germany finalises cash changeover plan; OECD takes its first look at the eurozone; Will consumption be hit by introduction of the cash euro? Progress in bringing down the cost of low-value payments. All these items will be covered in the next issue of euro-impact. For subscription information http://www.eubusiness.com/finance/euroimpact.html .


Other stories on EUbusiness in April
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Euro zone growth to reach 2.4% in 2001: BNP Paribas
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Growth in the euro-zone will slow noticeably in 2001, dropping by one percentage point from last year to 2.4 per cent, the French bank BNP Paribas forecast on April 13. (AFP)
Full story: http://www.eubusiness.com/item/44034


No cut in euro-zone interest rates
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Euro-zone interest rates remain at 4.75% after the European Central Bank (ECB) ignored mounting pressure to make cuts to promote economic growth. ECB President Wim Duisenberg said he did not think there was a risk of global recession, consumer confidence remains high and EU member states, not the Bank, should take responsibility for the low level of the euro.
Full story: http://www.eubusiness.com/item/43848


Euro-zone labour costs up by 3.5%
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Total hourly labour costs in the whole economy of the euro-zone grew by 3.5 per cent in nominal terms in the fourth quarter of 2000 compared to the same period the previous year, according o Eurostat. For the whole EU - EU15 - the rise was 3.6 per cent. Italy showed the lowest annual rise at 1%, but labour costs soared by 5% in France and 4.6% in the UK.
Full story: http://www.eubusiness.com/item/43575


Annual volume of retail trade up 2.3% in euro-zone
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Retail trade in the euro-zone grew by 2.3 per cent in the 12-month period to January 2001, says Eurostat. Over the same period, it gained 2.7% in the EU-15. Compared to last December, sales increased by 0.4% in the euro-zone and by 0.3% in the EU-15.
Full story: http://www.eubusiness.com/item/43325


Euro-zone economy grows 3.4% in 2000: final data
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The euro-zone economy grew 3.4 per cent in 2000 and activity in the whole EU expanded 3.3 per cent, final data from Eurostat shows, confirming previous estimates. Euro-zone and EU growth in the fourth quarter exceeded that of the United States, which recorded quarter-on-quarter growth of 0.3 per cent after an increase of 0.5 percent in the third quarter. (AFP)
Full story: http://www.eubusiness.com/item/43296


February euro-zone industrial producer prices up 0.2%
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The euro-zone industrial producer price index rose by 0.2 per cent in February compared with the previous month - according to latest estimates by Eurostat. Prices across the whole of the EU also rose 0.1% in February. The indices remained unchanged in both areas in January.
Full story: http://www.eubusiness.com/item/43262


Euro-zone economic confidence down again in March
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The economic confidence indicator for the euro-zone fell again in March by 0.6 points after declining in January and February - according to the latest monthly business and consumer survey by the Commission's economic and financial affairs DG. The indicator also fell by 0.5 points in March for the whole of the EU.
Full story: http://www.eubusiness.com/item/43005


Consumers, retailers agree action on euro changeover
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Efforts to prepare consumers and retailers for the changeover to the new currency at the beginning of next year are getting up steam. Representatives of consumer groups, retailers and SMEs reached agreement on 3 April on the final phase of the introduction of euro coins and notes in the euro-zone. Retailers agreed to display prices in euros from this September and to give the single currency more prominence than prices in national currencies. They also agreed to ensure the stability of their prices when fixing prices in euros, in line with a pan-European publicity campaign dubbed "new currency, stable prices".
Full story: http://www.eubusiness.com/item/43024

Internet Monitor
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Preparations for the introduction of euro notes and coins
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View the latest report on the preparations for the introduction of euro notes and coins on the Economic and Financial Affairs DG's site


Committee of the Regions plenary
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Main topics discussed at the 38th plenary session of the Committee of the Regions on 4-5 April 2001 included the euro.


Consumer familiarity with the euro
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A joint statement entitled: 'Good practice to promote consumers' familiarity with the euro and to facilitate the introduction of euro coins and banknotes in 2002' was issued on 2 April by representatives of consumers and representatives of traders and SMEs.


EMU diary
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Informal Ecofin Council, April 20-22, Malmo
Economic and Monetary Affairs Committee, EP, April 25, Brussels
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