The Duisenberg Legacy

The European Central Bank's first president, Wim Duisenberg, is leaving office with his head held high. Under his leadership, Europe's first central bank has "grown up," going from infancy to eminence in little more than a mere five years. The euro has been firmly established as a world-class currency. Inflation in the euro-zone economy hovers around 2%--more or less in line with the definition of price stability favored by the ECB. Inflationary expectations are stable, and the Governing Council runs smoothly.

Not everyone in Europe is happy with an anti-inflation central bank. Critics who want a more activist, growth-oriented monetary policy have tried--albeit unsuccessfully--to soften up the 68-year-old Dutchman with personal attacks and degrading insults. But the ECB head and the Governing Council refused to yield either to insults or to heavy-handed political pressure to cut interest rates, cut them again, and then cut them some more. The fledgling bank earned enormous credibility, but also considerable enmity, by sticking to its anti-inflation mandate.

Of course, the ECB has had its problems--mainly in the communications area--and Duisenberg's candor sometimes did get him into trouble. But these were small matters that were vastly distorted by critics with their own agendas for the bank. Whatever problems may have existed in the early years--too many voices, too little clarity of message--were smoothed out over time.

In a recent personal interview in his Frankfurt office, I asked Duisenberg what had been his single most important accomplishment in office. Without hesitation he responded that it was the smooth introduction and easy acceptance of the common currency. Now it can be told that the central bank had 25 to 30 disaster scenarios ready in case things went badly. None, in fact, was needed. The introduction of the euro currency was accomplished more smoothly than even the ECB had expected.