Examination of Witnesses (Questions 160-172)
Professor Richard Portes
17 JULY 2007
Q160 Lord Kerr of Kinlochard: I agree
with you that the Sarkozy line on competition at EU level will
be rather important. I hope that it will be a different line from
the Chirac line. I do not think we know. I think you can be reassured
that the removal of the words "competition that is free and
unfettered" from the draft constitutional Treaty will have
no legal impact whatsoever. The words were never in the Treaty
of Rome, or Maastricht, or Single European Act, or Amsterdam or
Nice. I know, because I wrote them in 2002, and, alas, the French
never liked them, at the time. Now my words have disappeared.
Since they never were in a ratified Treaty, that has no effect
on EU competition policy, run by that brilliant Frenchman Michel
Petite, in Brussels. His powers will be in no way constrained
by their removal. I agree with you, it is interesting because
we do not know the President's motive. If on national champions,
economic patriotism, he is going to run against Brussels, we are
back to Chirac. If, on the other hand, he is going to maintain
domestically that he has changed Brussels, and so reduce hostility
to Brussels, there possibly one could see the sad death of my
language as a good outcome, if it enables him to change. I was
going to take you on from competition policy to Paris' attacks
on another brilliant Frenchman, M Jean-Claude Trichet, and the
way the ECB operates monetary policy. M Trichet is told on a daily
basis, or was, in President Chirac's time, that his monetary policy
is too tight, his interest rates are too high, and the euro is
so ludicrously hard as to seriously penalise French trade. Do
you think the ECB has operated monetary policy wisely? The stress
on the inflation objective, is that right, or should they have,
as French commentators have argued down the years, an additional
growth objective? And do you think the objectives should be set
by ECOFIN or by M Trichet?
Professor Portes: You will recall, of course,
My Lord, that the conflict between President Chirac and Mr Trichet,
when he was Governor of the Banque de France, was exactly the
same conflict over the franc before, and that did not change.
It is natural, it is absolutely natural, that politicians, where
the independence of the central bank has not been fully established,
should take that line; we are familiar with that, we saw plenty
of it. What we have not seen, quite interestingly, since 1 May
1997, is that kind of political grandstanding pressure, whatever
you like, in this country, and I think that is quite interesting
but not totally the point. Let us get to the point, which is the
sorts of questions which you put about monetary policy itself,
that is to say, some of Mr Sarkozy's criticisms, whether economically
well informed or not, might there be some justice in them. I think,
on the whole, not; no. Take the first question about the restrictiveness
of monetary policy. If you compare long-term real interest rates
in the United States and the European Monetary Union since the
inception of monetary union you will find that there is very little
difference, we are talking at most times about differences of
50 basis points; nothing in it really. That is what we think is
relevant for growth, we do not think that the short-term policy
rate is relevant for investment decisions. What we have observed
is, as I say, regardless of the monetary policies being applied,
very similar long-term interest rates, and therefore, from that
point of view, a very similar environment for growth, and the
Fed has not been criticised on that count. The second way of looking
at it is something which was popular for a while among academic
researchers and recently has been taken up by private sector economists.
I will put in the technical term but then I will try to make it
reasonably intelligible, the Taylor Rule, looking at what a Taylor
Rule would suggest about the behaviour of the central banks. The
bottom line of all this is to try to formulate, quite precisely
and econometrically, what it is that, say, the Federal Reserve
Board of the United States, or the old Bundesbank, would have
done if they had been facing the same economic data as the European
Central Bank faced. You can investigate the behaviour of the Fed
and of the Bundesbank over time and then say, suppose you had
that decision-making process and the way in which it was operating,
what would they have done if they had been looking at the same
employment, price stability, all this stuff. The answer, uniformly,
whether it is academic researchers or private sector economists
who are doing these estimates, is that the Fed and the Bundesbank
both would have run more restrictive, tighter monetary policies
than the European Central Bank actually has done. There was a
little piece in The Economist about this, a year or so
ago, maybe it was two years ago, coming out of a piece by David
Mackie, of JP Morgan, which had done this in a reasonably intelligible
way, and the evidence is fairly clear on that. I do not think
the policy has been too restrictive. I think the problems of growth
in the euro area have been problems of a different kind and, as
I said, now we can see some progress on that. Should the ECB consider
other factors than price stability; well, the short answer is,
of course, the Treaty says no, the Treaty says only when those
are without prejudice to price stability, considering those other
factors. That said, look at the practice, and if you actually
look at the behaviour of the ECB since 1999 I think it is fairly
clear that they have looked at other factors besides price stability.
They have looked at that, they have looked at the level of economic
activity and this comes out just from looking at monetary policy
decisions and what the data were that were there at the time.
I think the simple answer is, whether you think it should or not,
whether you think it ought to have a different mandate from the
one that it actually has, in fact, it has not been looking only
at price stability, I think, and that is probably clear. This
is relevant to the inflation target issue, if you look at the
actual performance on inflation, sometimes it has been 80%, more
often than not, month by month, it has been above 2%, actually.
If you do just a simple count of the annualised rate of inflation
on a monthly basis, from month to month, in fact, the majority
of months it has been at a rate above 2%. In that sense, again,
you might say that, in practice, they are running a regime in
which 2% is not the upper inflexible limit but, in fact, it is
rather more symmetrical, around 2%; but that just comes out of
the data again. Should ECOFIN or the Eurogroup have the power
to set the inflation target, ECOFIN, no, ECOFIN has no standing,
in my view, in this matter, it is a Eurogroup matter. Yes, I think
that here the UK model is absolutely correct, the target should
be set by the political authorities, and that is a matter of policy,
that then the Bank is there to implement. The current position,
which is effectively the result of the Maastricht Treaty, that
the Bank decides whatever it wants to do on the target, I think
that is wrong, I think it gives the Bank too much independence
and does not give a proper political/policy dimension to monetary
policy. There is a role for the political authorities. I think
we have it right in the UK.
Lord Kerr of Kinlochard: This was the inherent
tension at Maastricht: the majority of those who are now in the
Eurogroup would totally agree with you, but the Germans did not,
so we ended up where we did.
Q161 Chairman: For fear of running
out of time, I am going to jump to the back end of the questions
because it is what you really want to talk about. I have the question
formulated as what has been the impact of the euro on the functioning
of European capital markets, and then we go on to the levels of
trade. Can I say, before we start talking about the European capital
markets, I have noticed from your CV that you are one of the wise
men who advise MTS. I sit on the Board of the London Stock Exchange
and currently, as you will know, we are proposing a merger with
Boursa Italiana. I just thought I would mention that before we
started, because it does seem to me to bear on reform structure,
while we are at it. Can I get you to talk about what you have
been doing in the function of European Capital Markets?
Professor Portes: I can talk at great length,
My Lord Chairman, about MTS, but I shall not; perhaps on another
occasion. I was involved as President of the Wise Men Committee
in adjudicating on the matter of the Citigroup operations on MTS
in August 2004, which raised quite a ruckus at the time and triggered
investigations by the various supervisory authorities, including
the FSA, which ultimately fined them its largest single fine and
the Wise Men Committee also imposed sanctions. I learned in that
exercise quite a lot about how the government bond markets operate.
I should say that the euro has had a tremendously positive effect
on the functioning government bond markets in Europe, i.e. minus
the function of corporate bond markets; let me take the two in
turn. The smaller countries, in particular, now find that their
bond markets are much more liquid than they were before, they
have much more foreign participation, for the simple, obvious
reason that they are all now denominated in the same currency.
Buying a Finnish bond is buying something which is denominated
in euros without the currency risk that you would take, as a member
of another Euro Area country, resident in another Euro Area country,
if you were to adopt a Finnish bond denominated in markka before
1999. The smaller countries have benefited, as I say, enormously
from this, and the result is that if you look at the functioning
of the European government bond market, the Euro Area government
bond market, now, in some respects it compares quite favourably
with the US Treasury market. I will not go into details there,
but the Treasury's market is the model for how a government bond
market should operate, and so on and so on. In terms of the efficiency
of the way the Euro Area bond markets operate, and in particular
the role of the futures market, much more developed, actually,
in the Euro Area than in the United States in the government bond
markets. Corporate bond markets, we at CEPR did studies last year
on both these markets in relation to MiFID and the transparency
requirements of MiFID and whether they should be extended to the
bond market. We discovered among other things that the spreads
in the Euro Area corporate bond market are now lower than those
in the US, in the corporate bond market in the United States,
and on that criterion, which is a pretty common criterion, what
does it cost you, in terms of margins, to trade, the Euro Area
corporate bond market is more efficient than in the US. If you
look at equities, where you will be very familiar with the transformation
that is taking place, it is still a very complicated landscape.
If you look at the chart, there is a famous chart, which is put
out by FESE, the Federation of European Stock Exchanges, where
you can see all the Exchanges and the interconnections among them
and their relations with the derivative markets and it looks like
a big bowl of spaghetti of different colours, gradually some of
the spaghetti is being eaten and that chart is getting a little
bit simpler as we go over time, with the gradual consolidation,
if you like, of the equity markets. The big obstacle there, as
you doubtless recognise, is clearing the settlement and that is
a topic which is so arcane in some ways and complex that it is
difficult for ordinary people to talk about it. I have no great
expertise in it but I do know what the costs are, and that is
the biggest single obstacle to rationalising, to expanding equity
market activity in Europe, but that is not just the euro area
that is throughout the European Union. If you then look at the
data on bond issuance, and that sort of thing, since the introduction
of the euro, you will find, for example, that two years ago, and
since, the Euro Area passed the United States in the issuance
of international bonds. In terms of current flow, there is more
international bond issuance denominated in euros than in dollars.
Nobody would have imagined that before 1999, if anybody had said
what would be the effects of the European Union. There has been
an explosion of activity in the capital markets and I think in
the Euro Area in particular this is bound ultimately to have substantial
effects on growth as well.
Q162 Lord Kerr of Kinlochard: May
I ask a follow up from that? I agree, nobody would have predicted
the astonishing take-off of the bond market and I hazard a guess
that nobody would have predicted either that the location which
has done best of all is a market not in the euro zone, i.e. the
London market. I would not have predicted that, at the time; would
you have?
Professor Portes: In what sense do you suggest
that the London market has done better than the euro one?
Q163 Lord Kerr of Kinlochard: In
terms of places where eurobonds are traded?
Professor Portes: Yes, that the trading would
be concentrated, that would happen mainly here. I think that is
right, it was not predicted and certainly I did not predict it.
On the other hand, by the way, if we look at the operation of
the corporate bond market in the United Kingdom we find that spreads
are significantly higher than in the euro area as well. Again,
by that measure of efficiency, we see that things are actually
operating rather well in the euro area.
Q164 Chairman: That is astounding.
Has the same effect been seen not just in bonds but in fixed interests
and derivatives?
Professor Portes: Derivatives, as I say, the
contract on the Bund is the biggest futures contract in the world.
It is quite interesting, there is a structural difference in the
way in which the US market operates and the way the Euro Area
government bond market operates, as I said, in the role of derivatives
and the futures markets. Roughly speaking, turnover in the Euro
Area government bond market is about one third in the cash market
and two thirds in the derivatives market. It is exactly the other
way round, it is one third in the derivatives market and two thirds
in the cash markets, in the United States. You can make a rather
technical argument that this is actually to the benefit of the
euro area, that the greater role of the derivatives markets here
gives a more efficient market overall. We will see, of course,
what happens now that the Chicago Board of Trade and the Chicago
Mercantile Exchange are merging; they will become a stronger competitor
to Eurex. One thing we have learned over the past decade or so,
really I think the first clear evidence of it was in 1997, when
LIFFE lost the contract on the Bund, that is to say, the ten-year
German government bond futures contract was traded primarily in
London, on the London International Financial Futures Exchange,
which is now the property of Euronext; within a period of months
this business transferred to Frankfurt. This is something that
we do not expect in the financial markets, we did not expect anyway;
normally liquidity creates liquidity and so it is hard to move
liquidity, but in this case it moved very rapidly, and the reason
for it was primarily technological. They introduced a better trading
system in Frankfurt and everybody realised this and, zap, off
went the business, it was cheaper and quicker to do it there.
What this shows is that it is not only currencies and all that
which matter, the technology is very important now and the technology
seems to be even more important as we go forward because of the
increasing role of hedge funds in trading in bond markets and
their desire, many of them, to do programme trading which involves
reacting within I will not say nanoseconds but mere seconds to
little tiny changes in prices, or divergences in prices, and trying
to arbitrage those away. That means you need very efficient electronic
technology to trade, if you want to act that fast, and the Exchanges
which have the best technology will get the business. I am not
sure that answers your question.
Q165 Chairman: I was just brooding
as to whether it did. It answers my question about that the derivatives
growth you would tag directly to the euro zone?
Professor Portes: I think a good part of it,
yes. The business in the main derivatives contracts for euro area
government securities has grown enormously. Let me just try to
explain why. The basic point is that those derivatives contracts
on the German government bond are used as a hedge for all trades
in the euro zone. That is to say, if you take a position in Italian
government bonds in the cash market you will hedge it against
a futures contract in the German government bond, or if you take
a position in the French government bonds, it will all be hedged
by operating in that futures market. Having a single common security
with which to hedge is a great promoter of the efficiency of the
market and activity in the cash markets.
Q166 Chairman: How very interesting.
There is a question we usually ask at some point, and it may be
that this is the moment. Do you think the euro itself is becoming
used increasingly as a reserve currency? It sort of bears on all
this.
Professor Portes: Indeed, and this is something
on which I have written, on the international role of the euro.
I think I and my former colleague, the current Finance Minister
of Greece, wrote the first paper on this issue in 1991 and then
my new colleague at the London Business School, Helene Ray, and
I published a paper on the subject in 1998, and currently I am
working on about three different papers on this. This is about
as close to my own research area as you can get, which makes it
harder to answer your question because there is too much to say.
Let me try to boil it down. The role of the euro as an international
currency has not been emphasised by the European Central Bank,
quite to the contrary, it has played a very hands-off role here,
in saying explicitly and at any time you ask that it seeks neither
to promote nor to hinder the development of the euro as an international
currency. That derives partly from the stance of the Bundesbank
in the old days, which resisted the use of the Deutschmark as
an international currency, in the belief that this would make
monetary policy more difficult, you would lose control of the
money supply, and so on. I think that argument and that policy
stance are questionable and I am working on that issue currently.
The facts so far are that the currencies of the countries going
into the Euro Area constituted about 17% of international reserves,
Central Bank reserves, at the beginning of 1999, when the transition
to the euro came, and now the euro is about 25% of international
reserves. The United States dollar is still dominant on reserves.
The growth of the euro's role has been primarily at the expense
of the yen and sterling and the Swiss franc; the share of the
dollar has not fallen very much, if at all, over that period.
The reserve currency role, first, is not the only game in town,
it is not the only issue, for an international currency. An international
currency is also a currency which is the centre of trading in
the foreign exchange markets, and there the dollar dominates completely,
at least according to the most recent data that we have. Where
a currency is traded in only a limited number of markets, the
dollar is the standard of reference. If you want to trade between
Indian rupees and Brazilian reals you go through the dollar and
you do not go through the euro. That may change but that is the
state of play right now. On the other hand, in financial markets,
as we discussed before, the role of the euro has expanded greatly,
and in private financial markets the euro as an asset currency
has greatly increased its role since 1999. The euro is an invoicing
currency, as far as we can tell, that is to say, in what currency
do you bill people, in what currency do Japanese firms send out
their invoices to firms in other countries, and the answer is
that the role of the euro has been growing significantly, gradually
but significantly, say, for Japan, now. Japan's firms used to
invoice a lot of their exports to the euro area countries in dollars
and now they are invoiced almost entirely in euros, that sort
of thing. The future, I think, will be an increased and growing
role for the euro, but the euro area central banks and authorities
should be very careful about this. If there were a sudden shift
of portfolios from dollar-denominated to euro-denominated assets
the exchange rate effects would be very powerful, and we are talking
about the euro going to $1.40, well, you can see it going a lot
higher than that if there was a major shift. We have seen, for
example, some of the sovereign wealth authorities, sovereign wealth
funds, some of these big, emerging, market capital, big reserve
holdings, are putting some of their reserves into special sovereign
type of wealth funds which invest in different ways from the central
banks. Norway has done this for a long time with its oil money.
Singapore has done it for a long time. Now other countries are
joining in. Those sovereign wealth funds are looking to diversify
and they do not like being so heavily in dollars, and they are
shifting, we can observe, to some extent anyway, from dollars
to euros. As I say, if that process were to gather speed then
the consequences for international financial markets would be
very considerable, and not necessarily benign, in terms of exchange
rate stability, and so forth, so one has to watch for that. I
think the bottom line is that the euro is challenging, in a sense,
the dollar in its role as an international currency, in various
dimensions; there are a couple of dimensions in which that challenge
is not yet apparent, but in a broad range it is, and that is perhaps
a cause for celebration in the Euro Area, perhaps not. I think,
getting outside your European remit, it may be a cause for concern
about the stability of the international financial system. After
all, the last time we observed a change in the dollar and currency
in the international system was the 1930s, when the dollar took
over from sterling. This was only a part of what was going on.
Q167 Chairman: It was a difficult
time; not a happy time.
Professor Portes: We refer to this sometimes.
There is a doctrine, if you like, perhaps that is elevating it
too much, but a view, called the hegemonic stability theory, or
hypothesis, the idea that you need in international financial
markets a hegemon, a dominant currency, in order to ensure
stability. If that hypothesis is true we may be in for a rough
ride.
Chairman: Thank you very much. I think that
we have just about got time to get through one more question.
Q168 Lord Inglewood: Moving area,
if I may. If we go back to the euro zone, and looking particularly
at those countries which are outside it and would like to come
into it, how do you feel about the appropriateness of the criteria
they have to meet in order to become members?
Professor Portes: In: that is to say, inappropriate.
Q169 Lord Inglewood: Exactly, yes.
I am being neutral.
Professor Portes: Estonia could have, and should
have, come into the euro area from day one, from 1 May, 2004.
It had been anchored to the Deutschmark then the euro in a currency
board system since June of 1992 without any hint of currency instability
whatsoever. There was no reason why Estonia—it had, in that
sense, demonstrated its capacity to take a single monetary policy,
in fact, the single monetary policy of the European Central Bank,
since 1999, because, effectively, for all practical purposes,
the kroon was the euro, and still is. Estonia does not have an
independent monetary policy because its currency is anchored through
a currency board to the euro, so it could have gone in straightaway.
The broader issue, which many of us pointed out well before this
all came up, is that the conjunction of the inflation criterion
and the exchange rate stability criterion is very difficult to
meet because countries which are growing relatively fast, as these
countries are, relative to the euro area countries, are catching
up. All that we know about that process suggests that these countries
will have to have some degree of real exchange rate appreciation,
and there are only two ways in which that can come about. Either
their nominal exchange rate appreciates, and this is what was
happening in Poland, for example, for quite a while, and then
they violate the exchange rate stability criterion, or the other
way you can get real exchange rate appreciation, and this is not
obvious perhaps to the non-economist but if you consider it, is
by having a faster rate of inflation than other countries. The
point about real exchange rate appreciation is that it compensates
for the differential of productivity growth. Those countries are
catching up, they have somewhat faster productivity growth than
the euro area countries; you would expect that to be compensated
somewhat by an exchange rate appreciation so that their goods
did not become ridiculously cheap. If productivity is increasing
fast and their exchange rate stays constant, in real terms, then
they become hypercompetitive. You do not expect to see that happen
and indeed one of the problems we are having with China now is
that China is not having the rate of inflation that you would
expect it to have in order to compensate for this fast productivity
growth, with a fixed exchange rate. In a sense, it is the opposite
side of that which happens in these countries which are catching
up; with flexible exchange rates, if you try to keep the exchange
rates within the ERM II sort of band then you would expect to
have higher inflation, and so it is very hard to satisfy those
two criteria at the same time. I will not get into the question
of whether the Maastricht criteria themselves make economic sense,
but that is a different issue. I am just saying it is harder for
these countries.
Q170 Lord Inglewood: If you were
given the job of refining these criteria, how would you jump?
Professor Portes: I think I would go with the
inflation criterion, and there are various ways you can adjust
it. It is an unrealistically tight criterion in the way it is
framed as well, because it is the average of the inflation rates
in the three lowest inflation countries, not in the Euro Zone,
in the EU. What is it right now, is it Sweden that has got this—this
is slightly absurd, more than slightly absurd actually, and that
does not make sense, but that was formulated, of course, at a
time when it was thought that all the countries would be in the
monetary union, but it has not turned out that way. That is the
criterion I would look at. There are various ways you could give
it more flexibility and I think it should have more flexibility.
Chairman: Thank you very much, Professor. Colleagues,
what have we not asked?
Q171 Lord Kerr of Kinlochard: I would
like to ask just one, about the stability of the whole system.
I am smarting from what Professor Portes has just said about the
Maastricht criteria. I am going to retaliate by saying I remember
him, in the mid nineties, I think, or perhaps early nineties,
being pretty strong on the exogenous shock theory. I remember
being quite strong on it myself. The exogenous shock theory has
gone out of fashion. Brent crude at $78, that looks quite like
a shock, with differential effects. The system, although it has
not yet had the labour market reforms, and it does not have and
it is not going to have a big fiscal flywheel, seems to be stable:
would you comment on that? To ask what you would have expected,
had you been looking from, 1995 or thereabouts, is a bit silly,
because very few of us would have predicted quite how many would
join EMU from the start; but how has its fragility/stability worked
out compared with your expectations?
Professor Portes: I can remember very clearly
discussions in the mid 1990s and even closer to 1999, suggesting
it was all going to end in tears very quickly and there would
be speculation. Indeed, the Chief Economic Adviser to the Department
of Trade and Industry, who had just stepped down, wrote a well-known
pamphlet, given great publicity, saying George Soros will be there
and the speculators will bring it down within months of January
1999. Of course, this was nonsense, as some of us did point out
at the time, but I can remember quite a number of meetings in
the City saying "It can't work; the legal obstacles, the
technical obstacles, running a counter monetary policy, is so
difficult, with all these different monetary policy systems in
different countries and institutions, and a single payments area."
My goodness, payments systems are so complicated, how can they
possibly put them all together at the same time. It worked out
rather differently, and every time I see a new pamphlet of this
kind, and doubtless some of you will have seen something which
came out from the Centre for European Reform, of all places, in
the autumn, which talked about the high risks of a break-up of
the euro area.
Q172 Lord Kerr of Kinlochard: ...It
was worry about Italy, and bond markets, wasn't it?
Professor Portes: I think the chances of a break-up
of the Euro Area are minimal, not zero; treaties have been abrogated
in the past. This is, after all, a treaty; you do not just walk
out and say, "Bye-bye, actually I want to go back to my own
currency now." This is a rather more formal obligation than
that and it has huge political dimensions to it which I think
countries would not lightly violate. On political grounds, I think
that the break-up of the euro zone, or an exit from the euro zone
by any country in it, is extremely unlikely; on economic grounds.
I do not think it would be particularly warranted either. It is
true that the economics literature, I did not contribute to this
literature myself, I hasten to say, did have quite a lot in the
mid 1990's about the risk of asymmetric shocks when a particular
outside event, like a rise in the price of oil, would affect different
countries in the zone differentially. Normally they would want
to have different monetary policies and exchange rate policies,
or exchange rate flexibility, to react to that shock, and they
could not, so there would be tensions, and that would be exacerbated
by the absence of labour market flexibility and the absence of
a fiscal redistributive system, and so forth. First of all, all
that is based on economic analysis, for which its author, Professor
Robert Mundell, got a Nobel Prize, but nevertheless it was economic
analysis which was done at the beginning of the 1960s when we
did not have open capital markets. That is a huge difference,
a huge difference. The capital markets have provided a lot of
the missing flexibility which labour market adjustment or fiscal
federalism was called upon to provide before you had open capital
markets. That is the first point. We do have much more of a range
of adjustment than was originally discussed, and it was not really
discussed much in the mid nineties either. The second is, which
was unexpected as well, there is a greater degree of labour market
flexibility in practice than people expected simply looking at
migration patterns among the euro area countries. Why? Because,
the same reason that we have had a remarkably flexible labour
market for the past several years: immigration from outside; in
the Spanish case, from North Africa, and Rumania and Bulgaria
actually too. The Spanish labour market has been much more flexible
over the past several years than anybody expected, because they
have had migration, so they have been able to accommodate this
boom, about which everybody said "Oh, it can't last."
To some extent that may be true, but so far so good, and part
of that has been facilitated by the availability of labour resources.
Here was Spain with a high unemployment rate, that unemployment
rate has come down very radically, and at the same time they have
been importing workers to do the jobs that Spanish workers do
not want to do, just as we have been importing Polish builders,
and so on. The conclusion I would come to is that there is more
labour market flexibility in practice than was expected when the
original discussions of these things took place. To sum up, I
do not think that the euro and the single monetary policy have
imposed constraints on countries and economies that those economies
will be unable to bear. Italy has big problems. Italy would have
had big problems without monetary union. We can hope that, in
fact, the constraints imposed by monetary union will push Italy
to resolve those problems, as, to some extent, clearly, they have
pushed Germany.
Chairman: Thank you very much. You have given
us most generously of your time. It was a terrific experience.
Thank you very much indeed for coming.
|
