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A top European Central Bank official has revealed that he believes the recent strength of the euro will lead to a much stronger euro-zone economy in the future.
ECB Board Member Juergen Stark told German daily newspaper Frankfurter Allgemeine Zeitung that the strengthening of the euro against the dollar is a positive trend that need not have a negative affect on European exporters.
"We saw that in the Germany with the strong deutschmark, and we saw it in France with the policy of the strong franc that led to much stronger economic momentum and an inflation rate that over many years was lower than in other countries," Stark said.
For now, it appears that the ECB is more concerned with controlling inflation, rather than taking action on the strength of the euro.
"We have a clear mandate to secure internal price stability," he added.
"Adding another target, such as exchange rate stability, to the list of tasks could lead to a conflict of goals and impair the warranty of price stability."
Stark’s comments repeat the sentiments expressed Monday by fellow ECB Board Member Lorenzo Bini Smaghi, who said there was no need for concern.
"The weakness of the dollar reflects the weakness of the American economy," he said.
He added that, in turn, the strength of the euro was indication that the euro-zone economy is currently healthy and in a strong position.
The euro rocketed to the highest it has ever been against the US dollar, 1.3846, on Monday, before falling back to $1.3802.
19:20
Posted on Jul-30-2007
