Still fighting over the single currency

Article Abstract:

Planned European monetary union is scheduled to be implemented from the start of 1999, and the new system is argued to have a number of advantages. These include an end to problems caused by exchange rate fluctuations which should especially benefit smaller firms. There may also be more discipline imposed on employees, forcing them to accept lower wages or lose their jobs, which should help keep inflation low. Critics argue that there is a lack of labor mobility in Europe, and that savings for businesses will be small. They are also concerned about structural differences between the economies concerned.

Monetary unions

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Europe's lucky break on interest rates: For now, the course of European interest rates seems clear. This certainty cannot last - and equities could suffer when it stops

Article Abstract:

There continue to be uncertainties about how the European Central Bank (ECB) will work. The ECB claims that the money supply is given priority when it sets interest rates, and any deviation from its reference value of 4.5% for the annual growth in broad money will bring inflationary or deflationary risks, it claims. It is likely that inflation rates will differ throughout euroland, and responses to changes in interest rates will differ, but the ECB will have to consider euro-area-wide developments, instead of specific national or regional factors.

Administration of General Economic Programs, European Union, Domestic Monetary Policy, Management, Interest rates, Central banks, Monetary policy

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