The euro is now well established in global financial markets, but the new currency still faces the challenge of gaining the wholehearted support of European consumers, Christian Noyer, vice president of the European Central Bank, said in Atlanta.
During a luncheon at Georgia Tech’s Sam Nunn School of International Affairs on Jan. 14, Mr. Noyer added that he thought the greatest challenge facing the currency would be its acceptance among the general population of the countries participating in the European Monetary Union (EMU).
He visited Atlanta on a tour of the U.S. South as part of an educational outreach about the currency, which was launched at the beginning of last year. Besides visiting the European Union Center of the University System of Georgia housed at Georgia Tech, he also spoke at a dinner of the Federal Reserve Bank of Atlanta.
Although the value of the euro has come against downward pressure recently from a stronger yen, Mr. Noyer said that improvement in Europe’s economy would sustain its value.
He briefly referred to wage negotiations as creating a possible problem for the euro’s competitive value if they provoke inflation. On the other hand, he viewed the decision of Denmark and Greece, as well as some other countries, to peg the values of their currencies to the euro as a sign of the currency’s growing stature.
And he praised the euro for expanding liquidity in Europe’s economy. Without the new currency, he said, mergers and acquisitions in newly deregulated sectors such as telecommunications would be inhibited.
According to Mr. Noyer, the euro’s acceptance by Europe’s general population when it replaces national banknotes and coins beginning in 2002 will be the currency’s major challenge during the next five years.
During this period, however, he said that he expects prices will become unified throughout the countries participating in the EMU.
Mr. Noyer visit to Atlanta was arranged with the support of The European Institute, a leading Washington, D.C., forum on European-American relations.
To learn more about programs of the EU Center, call Claire Hunter at (404) 385-0602, fax (404) 385-0603 or send an e-mail to EUCenter@inta.gatech.edu