Kilometres & Euros

VIEW FROM THE GROUND FLOOR

Another year another changeover - this time in speed signage for the roads. I never quite understood why we changed the distance signage but not the speeds before now. I’m sure it had something to do with public acceptance and getting us used to the idea, but it has to have been confusing for overseas visitors (to be honest, though, everything about our road signage is surely confusing for overseas visitors; I can’t understand half of it and I’m supposed to have some idea where I’m going).  Anyway, it’s another move to bring us closer to Europe but whether it will result in the old imperial terminology disappearing from our language is another matter. Whatever about the difficulty of understanding the relationship of feet, inches, yards and miles in comparison to the metric system, the words are much more evocative than millimetres, centimetres, metres and kilometres.

It’s surprising, thought, how quickly things can become familiar and right-sounding in conversation, replacing even the most well-worn phrases. The other day I was talking about prices of goods to some friends and the term ‘a couple of quid’ was used. Almost immediately we all agreed that it sounded dated and wrong, even though ‘a couple of euros’ still doesn’t trip as easily of the tongue.

Ireland seems to have shaken off its currency past (if not it’s association with imperial speeds) with an ease not yet matched by our continental neighbours. Nowhere in Ireland do you see the Irish Pound equivalent of the Euro price any more. Yet in many continental shops, both Euro and the home currency price are still displayed. To be sure, the price for the Euro is much more prominent, but the old equivalent is still given. In restaurants you’ll usually find it at the bottom of the bill.

According to our friends in Spain, many of the European ex-pats living there still convert back to their home currency. I can understand it on the part of the English residents (although our Welsh friends think in Euro all the time); but I was astonished to hear that the German and Dutch regularly convert back to deutschemarks and guilders too. Of course, in the case of the Germans, and despite the then government’s enthusiasm for the project, there is a definite nostalgia for the deutschemark and a feeling that the arrival of the euro further eroded Germany’s place at the top of the European pile. But the truth, of course, is that the misguided exchanging of ostmarks to deutschemarks at parity was one of the most destructive economic decisions ever made by a German government trying to be politically popular. Easy short-term political decisions with difficult long-term economic effects always come back to haunt you and that decision has been haunting Germany almost since the day it was taken. A case against the short sharp shock and in favour of a dual system after all?

Before the euro came into common usage, there were dire warnings about massive job losses in financial services as foreign exchange and treasury departments scaled back. But five years on this hasn’t happened to any great degree. There are still plenty of financial instruments to be traded and new markets opening up all the time. European specialists became Eastern European specialists and then new-Asian specialists so that the wheels of finance still kept spinning and the traders kept trading.

A long-standing friend returned from Germany last year where he had been working in the Bundesbank. The arrival of the Euro had meant that staff numbers there were being somewhat depleted, although not by any great amount. In fact there have been a number of analysts questioning staff numbers in European central banks. Apparently the Central Bank of France currently employs 15,000 - a drop of 3.6% since the introduction of the Euro in 2000.

Central Bankers aren’t fools. They had plenty of time to think about the Euro and think about the consequences for their jobs so they set about widening the scope of their financial regulation and research departments even as their power to set interest rates disappeared. The Banque de France operates services for businesses which include company ratings and assessments although its services to consumers seems to be limited to a national hot line to report stolen or irregular cheques (and the numbers of those actually declined from 1999 to 2003 - from 144,037 to 127,824)!

Our own Central Bank was in a similar situation as the euro changeover approached. It coped by restructuring and calling itself the Central Bank and Financial Services Authority which brought the supervision of all financial bodies operating within Ireland under its remit. The result - 716 people were employed by the bank in 1999; now it’s employing 1,005 - an employment coup, I think!

The lean and mean ECB has approximately 1,300 employees, many of whom are on secondment from or previously worked for individual central banks. The bank plans to move from its current location (the imaginatively named Eurotower in Frankfurt) to an impressive new building, the design of which was the subject of an architectural competition. (There’s a vast amount of information on the various designs which leads me to believe that one of the bank’s 58 divisions was entirely given over to the architectural competition.) The building will easily house a few thousand staff so the ECB is obviously planning for the future and keeping its eye on staff numbers as well as interest rates.

There are probably more people (including those in national Central Banks, a natural breeding ground for economists) analysing the ECB’s interest rate policy than actually formulating it. The general view is to expect a tightening in the early part of this year. In a recent press conference the bank stated that ‘the combination of high excess liquidity and strong credit growth could in some countries become a source of unsustainable price increases in the property market’.
All those people telling us things we already know!

Posted by Sheila on 01/24 at 03:09 PM - (0) ADD / VIEW COMMENTS