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To: long-gone who wrote (23191)	11/19/1998 9:52:00 PM
From: Lalit Jain	Read Replies (1) \| Respond to of 116763

Canada's Thiessen says euro reserves long way off OTTAWA, Nov 19 (Reuters) - Bank of Canada Governor Gordon Thiessen said on Thursday there was ''a long way to go'' before economies will use the euro as a reserve currency because the market will be too thin. ''A reserve currency has got to provide you with a number of things, but one of the things it has got to provide you with are very deep and liquid markets,'' Thiessen said in testimony to the Senate banking, trade and commerce committee. He said when the Bank of Canada wants to intervene in the exchange market it can sell U.S. treasury bills in New York without causing even a single-basis-point change in rates. ''Now if you wish to do that in Europe right now, you would be hard pressed.... Capital markets in Europe are much smaller and less important than they are in the U.S. (and) I think they've got a long way to go before those markets are going to be really deep,'' Thiessen said. He said it would also take time to achieve unified markets in Europe where all of the government debt as well as corporate securities are denominated in euros. ''Now I don't doubt that they'll get there, but it's not going to be tomorrow,'' Thiessen said. However he dismissed the suggestion that the euro may initially be a weak currency. ''Europe tends to run balance of payments surpluses these days (while) the Americans are running a very large deficit. Now if you want to go out say five years -- a significant amount of time -- I think you can readily predict that the U.S. dollar on balance is going to be weaker, because they've got a balance of payments deficit that they're going to have to deal with,'' Thiessen said. ''And of course if they are weaker, who are they weaker against? Presumably they're going to be weaker against the yen and the euro,'' he concluded. biz.yahoo.com