The Euro Needs All the Support It Can Get

Can praise for the euro from unexpected quarters damage the currency even further?

June 14, 2000

Can praise for the euro from unexpected quarters damage the currency even further?

Since the euro’s debut in January 1999, the central bankers responsible for managing the European single currency have rarely appeared in a flattering light. As the external value of the euro continues to slide, critics have been keen to point out flaws and contradictions in public statements made by members of the ECB governing council.

So perhaps it came as a relief to Mr. Duisenberg and his colleagues to receive solid praise from at least one quarter recently. The ECB’s President, according to this highly-placed actor on the global financial stage, is “a high-class banker with a high class team,” who “will give Europe a stable currency.”

The source of these remarks was Viktor Yushchenko, the prime minister of Ukraine. Prior to that, Mr. Yushchenko was Ukraine’s top central banker. With those credentials, Mr. Yushchenko would ordinarily be well qualified to give the ECB and its president a meaningful vote of confidence.

But this is the same Mr. Yushchenko who presided over Ukraine’s central bank in 1997 and 1998 when it provided false data to the IMF. By overstating the amount of currency reserves it had on hand, the bank helped Ukraine qualify for $200 million in new loans that the IMF might not have been willing to make. In the end, Mr. Yushchenko blamed Soviet-era accounting practices for the problem.

So while it is true that the ECB can use all the support it can get to face down its critics, Mr. Duisenberg, its president, might have hoped for someone with a little more “currency” in the global financial community.