Euro takes centre stage at Europlace
It wasn’t difficult to fathom the overriding concern of delegates and speakers alike at Paris’ first post- Emu Europlace conference.
Just a few months old, stumbling against the dollar and with disparate parental signals emanating from the continent’s bankers, the euro took centre stage.
As Jean Pisani Ferry, economic adviser to the French ministry of economy, finance and industry, summarised, the single currency had seen mixed blessings. “Seven months post-euro we should rejoice for many reasons. The transition was extremely smooth and the European Central Bank took charge quickly. But we are in a new and different environment now. The unease about the euro shows there is much unfinished business concerning the continent’s single monetary and budgetary policies.”
Patrick Artus, head of market research at Caisse des Dépôts et Consignations (CDC), continued: “One of the major issues appears to be the lack of an official exchange rate policy from the ECB. The problem has been that, viewed from Asia, the dollar has looked risk-free for investors while the euro seems very much the opposite. There is certainly a need for the ECB to talk to the markets with one voice and co-ordinate policies which take into account the continuing heterogeneity in Europe of GDP and different industry sector dominance, as opposed to the mess we have at present.”
On a positive note, André Lévy-Lang, chairman of the executive board at Paribas, noted the heady rise of the euro bond market. “The scenario has been much as expected, but the speed of change has been very surprising. There has been 50% volume growth in the last year alone with most in corporate issues. We are entering a virtuous cycle of liquidity with larger issues and better investment prospects and I can see the development of more high-yield bonds and asset-backed securities on the horizon. This has been the first visible sign of euro impact, and indeed M&A activity such as the Olivetti -Telecom Italia deal would not have been possible without the growth in the euro bond market.”
And in one of the conference’s keynote speeches Ernest-Antoine Seillière, chairman of MEDEF, the French business association, took the rare step of praising French finance minister Dominique Strauss-Kahn. “The euro has created the need to change and adapt business to the global scene. We believe the fundamentals in France in terms of interest rate policies are sound and should allow for French business to be successful in the future. Dominique Strauss-Kahn is not alleviating anything, but he is at least protecting French entrepreneurs.”
In his reply, Strauss-Kahn acknowledged the compliment, saying he believed France was in a better economic shape than many of its European neighbours. And on the global level he professed his belief that Europe was in line for a similar growth period as that experienced in the US.
A focal point of Strauss-Kahn’s speech though was an emphasis on the need for France to create “a truly risk conscious society and investment domain”. “We are seeking to simplify regulation for financial institutions and renew the fact that France is still an entrepreneurial country. However, this must be balanced by a dynamic but well regulated market.”
And Strauss-Kahn stressed that France would be pursuing the principles of fiscal ‘harmony’ and ‘transparency’ both on the European and global level. “I applaud the direction so far of EU working groups on these matters, which mean we should soon have new regulations from which we can work together in Europe to ensure the security of the capital markets system,” he said.