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To: Tommaso who wrote (181717)	7/21/2002 11:07:01 AM
From: Haim R. Branisteanu	Respond to of 436258

EU's Prodi pleased euro not hurt by Trichet-paper July 20, 2002 06:42 AM ET BERLIN, July 20 (Reuters) - European Commission President Romano Prodi was quoted on Saturday as saying he was glad the euro had not been dented by news that Jean-Claude Trichet, long slated as next European Central Bank president, faced trial. But Prodi admitted that the currency could be hurt by news the Bank of France head, due to take over Europe's top central banking job next July, must stand trial over a banking scandal. "Of course that could become a problem. I don't now how much more serious the trouble around Trichet will become. But the media love these kind of stories," Prodi told the Berliner Zeitung daily in an interview. "Trichet is an excellent and intelligent man. But what is much more important is that the case has not hurt the euro. That shows that the ECB is already accepted as a strong institution, whoever should lead it. The bank is no sick child." In a shock decision on Tuesday, a French magistrate said Trichet and a string of others should stand trial over the Credit Lyonnais banking scandal in the early 1990s, when Trichet was head of the Treasury, part of the French finance ministry. Prodi said the strengthening of the euro against the dollar in recent months to reach parity on Monday for the first time since February 2000 was important for increasing public support for the new currency and said it should not hurt exporters yet. "Overall the increase is good for business, for example because it slows inflation. Trade flows also show that the current rate is not damaging," he said. "But if we returned to where we were when the euro started in 1999 -- to $1.17 -- that would be difficult for exporters. In the long term, a rate of one to one is better for our industry than a rate of one to 1.17," he said. U.S. CRISIS OF CONFIDENCE Prodi said the recent accounting scandals and plunging share markets in the United States that accounted for the dollar's fall against the euro had shaken faith in the U.S. capitalist model, including the faith of President George W. Bush. "For 10 years people were convinced that unbridled capitalism was good. That is no longer valid. I am sure that there will soon be a fundamental debate in the U.S. about the economic system," he said. In the euro zone, meanwhile, Prodi said stronger sanctions were needed to enforce government budget deficit rules. Asked if Europe needed a common economic goverment, Prodi said: "In certain questions we need binding decisions. For the rest, general coordination is enough. But I don't know how long that will take." Prodi brushed off new criticism last week by German Chancellor Gerhard Schroeder of what he called the "neo-liberalism" of the European Union Commission. "Germany has no monopoly on criticism of the EU Commission. I even believe that the German criticism is below average," Prodi said. "In fact, we get on excellently with the German government. Schroeder has never worked against us." "Of all the big European countries, Germany was always the one that was most pro-Europe. At no summit have I had the impression that in central questions Germany was against closer cooperation," he said.