Tokyo | Wednesday
ONE monetary policy is not a handicap despite an array of economies in the euro zone, a key European Central Bank official said on Wednesday, after Germany escaped a reprimand over its growing budget deficit.
”It is difficult to know if there is a perfect monetary zone,” ECB vice president Christian Noyer told a symposium in Tokyo.
”Differences in business cycles and growth and inflation may happen very often inside a single country,” he said.
He was speaking after EU finance ministers late on Monday decided not to rebuke Germany and Portugal for letting their public deficit edge towards a euro group limit of 3% of gross domestic product (GDP).
Under a compromise deal, Berlin agreed to bring its public finances ”close to equilibrium” by 2004, accompanied by economic growth.
The European Commission had recommended finance ministers from all 15 EU countries scold Germany with an ”early warning” after it forecast its public deficit would reach 2,7% of GDP this year.
Portugal — which last year doubled its forecast public deficit to 2,2% — also managed to escape with a compromise similar to Germany’s.
Noyer declined to comment directly on the move, but fiercely advocated the concept of monetary union.
”It is very obvious in the US. You can have a boom in California in the IT (information technology) sector and a recession in Texas because of a crisis in the oil industry. Nevertheless there is one monetary policy and one fiscal policy,” he said.
”You have also big differences in Germany between the north and the south-west and you can say the same for the north of Italy and the south of Italy.
”Having a single policy (for the euro zone) is not a handicap,” said Noyer. – Sapa-AFP
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