At just the very moment that the British people’s fixed resolve not
to join the euro is being vindicated by events, some functionary
from the European Central Bank gets cross with Britain for “allowing”
the pound to slide.
Somebody should give him a lesson in elementary economics. Viz ---
The pound floats and the result is that the pound over time reflects
its true value. If this illiterate ECB man thinks it is undervalued
all he needs to do is to get the ECB to buy lots of pounds; then it
will rise in value. Britain does not determine its value, the
market does. (And incidentally the euro “slid” appreciably yesterday
when the implications of the news from Eastern Europe sank in)
This means that politicians can only influence its value if they
spend a lot of their own money on trying to influence it! The ECB
was quite happy to let it float when it suited them but when it suits
us he gets steamed up!
Today sees a major rise in the crisis temperature from Eastern Europe
and the Eurozone bankers are in near panic to prevent the contagion
spreading to Austria, Germany, Belgium and Sweden who have all been
recdklessly lending vast sums to peasant economies.
Read on in my next posting - it gets worse! - much worse!
Christina
========================
TELEGRAPH 19.2.09
ECB's Lorenzo Bini-Smaghi hits out at sterling
The prospect of a currency battle between Britain and Europe loomed
larger last night after the man considered to be the international
ambassador for the European Central Bank delivered a thinly-veiled
swipe at the level of sterling.
By Edmund Conway, Economics Editor
In comments which underline the scale of concern throughout Europe
about the sharp decline in the UK currency in recent months, ECB
Executive Board member Lorenzo Bini-Smaghi said that EU countries
should not allow their currencies to slide in order to gain an
economic advantage.
The pound has slid by the biggest amount since the demise of the
Bretton Woods system in the 1970s - something economists regard as a
significant boost for UK exports.
However, Mr Bini-Smaghi said in a speech in Berlin: "The current
crisis is bound to raise again the issue of whether a single market
like the one we have among 27 countries in the EU can function
smoothly when the exchange rate of some of the members is allowed -
or even encouraged - to depreciate sharply, possibly distorting
competition.
"The integrity of the single market itself can be put at risk if the
exchange rate is used - and seen to be used - as an instrument to
gain competitiveness at the detriment of the others."
Mr Bini-Smaghi also indicated that he was pushing the UK to allow the
ECB to become a pan-European financial regulator in the future. He
said he expected the UK to agree to proposals which would grant the
ECB supervision over banking throughout the continent.
to join the euro is being vindicated by events, some functionary
from the European Central Bank gets cross with Britain for “allowing”
the pound to slide.
Somebody should give him a lesson in elementary economics. Viz ---
The pound floats and the result is that the pound over time reflects
its true value. If this illiterate ECB man thinks it is undervalued
all he needs to do is to get the ECB to buy lots of pounds; then it
will rise in value. Britain does not determine its value, the
market does. (And incidentally the euro “slid” appreciably yesterday
when the implications of the news from Eastern Europe sank in)
This means that politicians can only influence its value if they
spend a lot of their own money on trying to influence it! The ECB
was quite happy to let it float when it suited them but when it suits
us he gets steamed up!
Today sees a major rise in the crisis temperature from Eastern Europe
and the Eurozone bankers are in near panic to prevent the contagion
spreading to Austria, Germany, Belgium and Sweden who have all been
recdklessly lending vast sums to peasant economies.
Read on in my next posting - it gets worse! - much worse!
Christina
========================
TELEGRAPH 19.2.09
ECB's Lorenzo Bini-Smaghi hits out at sterling
The prospect of a currency battle between Britain and Europe loomed
larger last night after the man considered to be the international
ambassador for the European Central Bank delivered a thinly-veiled
swipe at the level of sterling.
By Edmund Conway, Economics Editor
In comments which underline the scale of concern throughout Europe
about the sharp decline in the UK currency in recent months, ECB
Executive Board member Lorenzo Bini-Smaghi said that EU countries
should not allow their currencies to slide in order to gain an
economic advantage.
The pound has slid by the biggest amount since the demise of the
Bretton Woods system in the 1970s - something economists regard as a
significant boost for UK exports.
However, Mr Bini-Smaghi said in a speech in Berlin: "The current
crisis is bound to raise again the issue of whether a single market
like the one we have among 27 countries in the EU can function
smoothly when the exchange rate of some of the members is allowed -
or even encouraged - to depreciate sharply, possibly distorting
competition.
"The integrity of the single market itself can be put at risk if the
exchange rate is used - and seen to be used - as an instrument to
gain competitiveness at the detriment of the others."
Mr Bini-Smaghi also indicated that he was pushing the UK to allow the
ECB to become a pan-European financial regulator in the future. He
said he expected the UK to agree to proposals which would grant the
ECB supervision over banking throughout the continent.
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