In the transatlantic rivalry between the euro and the dollar, the ECB and the Federal Reserve, Wim Duisenberg and Alan Greenspan, the Europeans have come off the worse so far. With only a few short periods of respite, the euro's exchange rate has fallen steadily ever since it began trading on 4th January 1999, by a total of 27%. There are no convincing signs yet that the currency will buck this trend. Even if the European Central Bank has always argued cogently that its task is solely to. safeguard the euro's internal value (i.e. to prevent price inflation) and not to stabilize its external one (the exchange rate), it remains a truism that a currency's exchange rate is a yardstick for the confidence international investors, and those at home, place in the economic zone it represents, and also for the reputation enjoyed by its central bank. In its short life, the ECB evidently has not yet managed to build up the kind of reputation that has long been held by the Fed and its Chairman, Alan Greenspan.
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