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Lady EUROpa and the Monetary Bull

Friday, 16 May 2008 | 11:15 AM ET

- Notes from an ECB groupie's travelog -

You might have guessed by now - where the ECB goes, I go. That's the way it is with a Euro groupie. So, when the Jean-Claude Trichet and his merry men (and woman) leave the banks of the river Main in Frankfurt to set sail to one of the other EURO capitals ... well, I pack my bags and follow in tail waters.

This time the ECB council headed southeast to Athens. And I for one was not complaining. Well... Traipsing around the Acropolis (even in wind and rain, as we did!) simply HAS to be a perk.

I hadn't been in Greece for a number of years, so I noticed how much Athens had changed over the past decade or so. You can SEE prosperity ... You know, the cars on the streets of the capital no longer old bangers with lots of dents and rattling exhausts ... many of the yellow taxis shiny and new ... and the shops and shoppers much smarter, much more up-market.

Ok, some of this - especially the beautification of parks and public buildings - must be the windfall profit from the Athens Olympics four years ago. Some of this, but by no means all of it. So where does the rest come from? And while we're at it: How exactly did Greece weather the snake-haired Medusa of the subprime crisis so far?

Answer to the latter: Amazingly well! Direct exposure to subprime-related investment almost not to be found in (or off ) the balance sheets of Greek banks. Somehow, it seems, the Greeks felt no overwhelming desire for US housing investment. Good for them!

And what about the Greek economy? How is it faring with the Euro and its one-size-fits-all monetary policy? - Like in some of the other former weak-currency countries, inflationary pressures are a bit higher, many structural and fiscal problems are still untackled, a housing bubble is threatening to burst .... need I say more? A picture not unfamiliar from the other EURO zone fringes - be it Spain or Ireland.

So, is there a Greek voice for rate cuts in the ECB council? - Not likely, says Prof. Panagiotis Korliras, former Deputy Governor of the Greek national bank. "From the outside, people often think that ECB councilors and policy discussion run along national lines. That is not so", he points out. "The members of the council think much more European. They make decisions for the region as a whole and don't fight a trench war for national interests." - Interesting. THAT is certainly what EBC president Jean-Claude Trichet usually insists as well. Maybe it was time we started believing it.

And the people of Greece? What do they make of the EURO and its mixed blessings? ... Well, my utterly non-representative polls at the restaurants of my choice and in the shops and streets of Athens produced a picture that's also all too familiar: Everything seems more expensive with the Euro. But it's certainly sooooooooooo practical not to have to keep all sorts of different currencies in your pocket and exchange rates in your head.

And the latter is something yours truly has really learnt to appreciate. Your can travel from Dublin to Athens, from Helsinki to Cyprus without having to show your passport and without having to change your currency. That IS a blessing and it has changed the face and the feel of Europe, is changing it every day ...

As the late first ECB President Wim Duisenberg put it ten years ago, when this new central bank for Europe and its currency was inaugurated: "The introduction of the single currency - the euro - in 11 countries of the European Union on 1 Jan 1999 is more than a milestone in the process of European integration." It certainly is. No doubt one of the reasons why Britain, for example, so stubbornly clings to its imperial Pound Sterling. Because European integration ... well, that's the last thing the Euro-skeptic Britons want.

Oh, and what about the title to this blog? ... Well, it's about Greece and I always liked that picture, ok? And, by the way, the pictures are indeed from our recent ECB trip to Athens. Yamas!

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