Countdown to EMU largely ignored in U.S.
07:02 p.m May 01, 1998 Eastern
By Caren Bohan
WASHINGTON (Reuters) - On the eve of a summit that will formally approve
the founding members of a single European currency, the event has
sparked remarkably little discussion in U.S. policy circles and has been
largely ignored by Americans.
Despite the U.S. apathy, Europe's economic and monetary union offers
potentially vast opportunities to American businesses, while posing huge
risks for the global economy.
In Brussels this weekend, 11 countries are expected to agree to join EMU
. Germany, France, Italy, Spain, Belgium, the Netherlands, Ireland,
Luxembourg, Finland, Portugal and Austria will begin introducing the new
currency, the ''euro,'' next January.
Together, the nations will form an economy only slightly smaller than
that of the United States.
Clinton administration officials have expressed guarded optimism about
the prospect of a stronger, more dynamic European economy and the
benefits it could bring to the U.S. economy.
''On balance, my reading of EMU would be that whatever is good for
Europe, and Europe's growth and stability and integration, is probably
good in the long run for the United States,'' Janet Yellen, chairwoman
of the White House Council of Economic Advisers, told Reuters in a
recent interview.
But the topic arose at only a handful of forums this week in Washington
with business leaders and U.S. officials.
The subject was not broached at all during President Clinton's almost
one-hour news conference Thursday, which touched on a wide range of
domestic and international issues.
Only four congressmen took part in the lone hearing this week on Capitol
Hill regarding EMU. The House Banking Subcommittee hearing featured
testimony from private-sector policy experts but no administration
officials.
Delaware Republican Rep. Michael Castle, who presided over the hearing,
lamented that the ''watershed event'' of European currency conversion
had not been accorded the status it deserved in the United States.
''The implications of this are nothing short of revolutionary, but by
our standards, there has been relatively little public debate,'' he
said.
A main topic at the hearing was whether the euro might challenge the
dollar's role as a global reserve currency, which enables the United
States to use dollars to buy oil and finance a large trade deficit.
The general conclusion was that while the euro would not replace the
dollar as the leading currency, it might eventually equal it in stature,
an issue that the experts said policy-makers should confront.
During a Chamber of Commerce forum entitled: ''The Euro: Friend or
Foe?'' David Currie, a professor at the London Business School,
presented various scenarios for EMU.
He said those ranged from a strong and deregulated European economy to
economic strife prompting disenchantment with the euro and ''a wave of
protectionism in Europe.'' He called that worst-case scenario ''rather
unlikely.''
Princeton University Professor Peter Kenen said: ''I look forward to
good economic news.'' But he predicted a period of adjustment as the
planned European Central Bank attempted to balance the interests of the
various member countries and make the necessary political compromises.
Amid the deafening silence in Washington on EMU, many businesses across
the country have been quietly laying plans to deal with the changes
brought about by EMU.
The most immediate hurdle for many was updating computerized accounting
systems to be ready to handle the new euro denomination.
''We feel pretty good about it,'' said Rob Friel, treasurer at New
Jersey-based AlliedSignal, who said his company had combined some
preparations for the euro with fixing the so-called ''millennium bug''
in advance of the year 2000.
Copyright 1998 Reuters Limited |
