Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

A thin line between fact-checking and propaganda in Gaza social media coverage

Read more

DEBATE

Gaza: How to Stop the Spiral? Israel Readies For Ground Offensive (part 2)

Read more

DEBATE

Gaza: How to Stop the Spiral? Israel Readies For Ground Offensive

Read more

FOCUS

Ireland's missing babies casting light on a dark history...

Read more

WEB NEWS

World Cup 2014: Germany-Brazil inspires the Web

Read more

THE INTERVIEW

Boutros-Ghali: 'I wanted to reform the UN'

Read more

IN THE PAPERS

57 000 little problems

Read more

IN THE PAPERS

The Sarkozy 'threat'

Read more

BUSINESS DAILY

Budget challenge for India's new government

Read more

  • Hamas rockets reaching deeper into Israel

    Read more

  • French companies will have to accept anonymous CVs

    Read more

  • Ukrainian forces close in on Donetsk

    Read more

  • Germany asks US intelligence station chief to leave country

    Read more

  • Death toll rises in Gaza as militants target Israeli cities

    Read more

  • UN chief Ban Ki-moon appoints new Syria mediator

    Read more

  • Video: Muslims in China confront obstacles to Ramadan fasting

    Read more

  • Tour de France passes WWI Chemin des Dames battlefield

    Read more

  • Senegalese man awarded French visa in gay marriage debate

    Read more

  • Israel steps up airstrikes as diplomacy gets under way

    Read more

  • Argentina beat Netherlands on penalties to reach World Cup final

    Read more

  • Foiled French jihadist ‘targeted Louvre and Eiffel Tower’

    Read more

  • Obama in Texas to urge congressional action on child migrant crisis

    Read more

  • Iraq’s heritage 'in danger' from ISIS militants

    Read more

  • 100 years on, the Tour de France returns to the Western Front

    Read more

ECB celebrates 10th anniversary

©

Latest update : 2008-06-02

One of the world's most powerful financial institutions, the European Central Bank opened its doors on June 1, 1998. Ten years on, the ECB is busy resisting pressure from EU leaders wanting to make it a scapegoat for slow growth and rising prices.

 

"I congratulate you on your impossible job!"

 

That backhanded compliment, from Nobel Economics Laureate Milton Friedman to the European Central Bank’s first chief economist, Ottmar Issing, in 1998, speaks volumes about the early skepticism surrounding the ECB.   

 

On Monday, as the champagne corks pop in Frankfurt’s steel-and-glass Eurotower, the ECB is marking one decade as the eurozone’s ultimate arbiter of monetary policy. Today, that zone encompasses 15 nations and 320 million citizens.

 

It’s a destiny that critics thought would never come to pass.

 

While the ECB may today l seem an inevitable fixture on Europe’s institutional landscape, it took some 30 years of heated polemics to bring the concept to fruition.

 

Many deemed it sheer folly to have a single bank setting monetary policy for a region as diverse as Europe.

 

The German Bundesbank had traditionally been the de facto monetary policy kingmaker – a role that few predicted anyone could usurp anytime soon.

 

Yet today, the ECB, and its crowning achievement, the euro single currency, have withstood the slings and arrows of detractors to establish themselves as more than worthy rivals to, respectively, the US Federal Reserve and the dollar.

 

There's even talk that the euro could supplant the almighty greenback as the global currency of choice in the next decade or so. 

 

Meanwhile, the ECB's chief since 2003, the frenchman Jean-Claude Trichet, has asserted himself as a nimble sparring partner – and a nemesis - to the Fed's Ben Bernanke.

 

The ECB’s recent policy of standing firm on interest rates – part of an inflation-fighting mission enshrined in its founding charter – has set it in stark contrast to Bernanke’s rate-slashing Fed.

 

The dichotomy has raised the profile of both banks, and fired a fierce debate over the banks’ divergent notions of the best monetary medicine.

 

As for the euro, its success is uncontestable.

 

Twenty-five percent of the world's foreign currency reserves are now said to be in euros -  versus 18% in 1999. Meanwhile, 10 countries are in line to join the 15 already admitted to the eurozone.

 

As for exchange rates, the euro is hovering near $1.60 – way above the parity level whose breaching was once seen as a high water mark.

 

But that’s not to say big challenges don’t remain.

 

Tough economic times across much of Europe have prompted a search for scapegoats – and the ECB and the euro are easy targets. France’s president, his popularity ratings in decline, has been among the most assertive in calling for the EU to tailor its policies more to job creation and growth.

 

Critics tend to regard such calls as a potentially dangerous infringement on the ECB’s independence, and a threat to its mandate to remain above the political fray.

 

Others blame the euro for pushing prices up across Europe at a time when inflation is at record levels.

 

In fact, according to one estimate, prices in the region have risen less in the past ten years than they did in the 10 years prior to the euro. That suggests that at least some of the euro-bashing is based more on raw emotion than rational number-crunching.

 

One thing is for sure: the ECB cannot rest on its laurels. The Bank is likely to face mounting pressure from national politicians looking for short-term economic fixes.

 

But thanks to its steadfastness over the past 10 years, the ECB’s job may now be a little less impossible than its early critics had it.

Date created : 2008-06-02

Comments

COMMENT(S)