By David Barwick
WASHINGTON (MNI) – It is the job of financial markets to determine
the relative value of currencies, European Central Bank Governing
Council member Ewald Nowotny said Sunday.
Speaking at an event on the margins of the Annual Meeting of the
IMF and World Bank, the head of the Austrian National Bank reminded that
“we have to be aware that the ECB doesn’t have an exhange rate goal.”
“It’s a matter of the markets to decide on exchange rates,” he
said.
“From our point of view we do not have any ambitions with regard to
the international role of the euro. This is something for the markets to
decide, but the decisions of the markets show that there is an
increasing role of the euro as a reserve currency.”
Although “there are problems with the international monetary system
as we have it,” he said, “I think it would be an illusion to go back to
the system of fixed exchange rates … what we want to have is a more
stabile system.”
Nowotny said he had “some understanding” for countries wanting to
have more liqidity and thus higher reserves, noting that many of them
still recall the “huge shock of the Asian crisis.” a
“And what they told us is that ‘we never again want to be in a
situation where we have to go to the IMF. We want to be on the safe
side.'”
One of the results of the crisis might thus be that “in general
there will be a higher demand for liquidity,” he said.
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
** Market News International Washington Bureau: 202-371-2121 **
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