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Thursday, 7 February, 2002, 10:35 GMT
Wim Duisenberg's legacy
ECB president Wim Duisenberg
Mr Duisenberg presided over the ups and downs of the euro
by BBC News Online's Steve Schifferes

Wim Duisenberg, the Dutchman who has headed the European Central Bank (ECB) since its inception, is standing down in July next year.

Under Mr Duisenberg, the ECB has successfully launched the euro, the single currency used by the 12 countries of the eurozone, first as a wholesale currency and then - this January - as a cash currency used by 300 million European citizens.

The smooth launch of the euro, despite predictions of fraud and chaos, has made it easier for Mr Duisenberg to step down with a feeling of success.

The launch of the euro as a cash currency went smoothly
The launch of the euro as a cash currency went smoothly
But the ECB under Mr Duisenberg has been seen as less successful in other areas of economic management.

The value of the euro against other currencies, especially the US dollar, has fallen since its launch in 1999 by nearly 30%, and it is now languishing near record lows again.

And the ECB, which sets interest rates across the eurozone, has not moved fast enough to prevent Germany from falling into recession, with unemployment rising over 4 million.

The German candidate

Mr Duisenberg's appointment to head the ECB came at the behest of Germany, which wanted to ensure that the organisation operated on the model of the German central bank, the Bundesbank - insulated from political pressures, and focused solely on long-term stability and low inflation.

The ECB is governed by the heads of all 12 central banks
The ECB is governed by the heads of all 12 central banks
But in the highly political atmosphere of the ECB, where Germany has just one vote among 12, Mr Duisenberg often appeared awkward at handling the press and presenting the ECB's case, and disdainful of politicians.

He once famously said "I hear but I don't listen" when asked about pleas to cut interest rates, and undermined other central bank moves to boost the euro by telling newspapers he didn't think they would intervene again.

He admitted that it took him a while to get used to the fact that "the world watches every word you say," and his taciturn style at press conferences has won him few admirers.

Nevertheless, the ECB has moved gradually towards more open decision-making, publishing its forecasts and economic targets.

And many of the problems of the new currency are not of Mr Duisenberg's making.

The weak euro is partly due to a perception in currency markets that in the long-run, the US economy is more dynamic than Europe.

And the governing structure of the ECB gives him limited powers as against the central bankers from the 12 eurozone countries, compared with the absolute power Alan Greenspan is able to wield at the Federal Reserve.

Financial markets may well regret his passing if his successor is seen as more susceptible to political influence.

Dutch roots

Mr Duisenberg is by training an economist, educated at Groningen University. After a spell at the IMF in Washington, he taught at Amsterdam University before becoming an advisor to the Dutch central bank.

He was Dutch finance minister in 1973-77, in a left-wing government during the oil crisis.

But it was his role as the head of the Dutch central bank for 11 years, when he presided over the country's economic miracle, that made his reputation.

The combination of stable prices and interest rates, low unemployment, and high growth was the model he wanted to apply to Europe.

Mr Duisenberg is a golfing enthusiast who once missed a meeting with bankers to compete in a Spanish tournament.

He has married twice, with three grown-up children.

But his vocation is as a true European: multi-lingual, he lives both in Frankfurt and Amsterdam while having a holiday home in France.

And in all his press conferences, his most emotional moment came during his speech introducing the euro coins and notes to the public last August, when he spoke movingly of the historic project to end war and conflict throughout Europe through monetary union.

Jim O'Neill, Goldman Sachs
"The general hostility towards Mr Duisenberg is pretty unwarranted really"
See also:

07 Feb 02 | Business
Duisenberg to quit ECB
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