Decision to Split Key Job Casts Shadow Over Euro
European currencies and bond markets are expected to give the euro a damp welcome today, with sentiment dented by fears that the European Central Bank’s policy could be politically influenced.
The European Union’s move to split the term of the ECB presidency between Dutch and French candidates opened the way for the independent central bank to be subject to political interference, analysts said Sunday.
“The market reaction will be disappointment at the split term of the ECB,” said Cesar Molinas, an analyst at Merrill Lynch. “It’s an example of how far politicians will go to push absurd measures through just for national pride. It’s not a very good omen of how well the relationship with the ECB and governments will develop in the future.”
The ECB dispute gave a sour note to the historic meeting this weekend, where Europe’s leaders announced that 11 countries would launch the new single currency on Jan. 1, 1999.
Dutchman Wim Duisenberg was appointed for a full eight-year term as head of new ECB but made it known he would stand down on grounds of his age once euro bank notes and coins replace national currencies in 2002. Bank of France’s governor, Jean-Claude Trichet, would then take over for the next eight years.
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