|
Euro a hot topic for G-7
|
 |
September 22, 2000: 2:44 p.m. ET
ECB defense of ailing euro, oil on the short list at weekend meeting
By Staff Writer M. Corey Goldman
|
PRAGUE, Czech Republic (CNNfn) - A surprise move by the European Central Bank to swoop into currency markets, in an attempt to prop up the floundering euro, will most certainly make the short list of topics finance ministers of the Group of Seven industrial countries will discuss this weekend at the International Monetary Fund-World Bank annual meetings.
 The ECB, the 11-country euro zone's equivalent to the Federal Reserve, launched a long-awaited defense of the ailing European single currency Friday, saying it had joined forces with the central banks of Japan, the United States, England and Canada to buy euros in the open market as the currency's slump threatened to accelerate inflation and hurt the competitiveness of other nation's economies.
The move stunned currency markets, which drove Europe's single currency up some five percent through the day. It also shocked delegates and officials at the IMF-World Bank meetings, who publicly kept mum on the central bank's surprise move but privately praised its action as a long-overdue way to telegraph to financial markets that the euro is undervalued.
"I will not talk about this experience," Hans Tietmeyer, former president of the German Bundesbank, told delegates gathered at one of the many seminars being held in conjunction with the meetings. "But, as I wrote before today, a signal of intervention by central banks can be an extremely effective move. I am not disapproving in certain situations of joint single intervention," he said.
Lots to discuss
The euro shot up to a two-week high of 89.92 U.S. cents, up from Wednesday's record low of 84.43 U.S. cents. The currency is still down roughly 25 percent since its introduction in January 1999.
Ministers from the G-7 -- Canada, France, Germany, Great Britain, Italy, Japan, and the United States -- will gather at the majestic German embassy located just below Prague Castle, one of the oldest and most beautiful sections of the city. Discussions between the leaders will focus on everything from the ailing euro to the seesaw U.S. stock market to funding of the Heavily Indebted Poor Countries, or HIPC initiative, to the high price of oil.
 Indeed, U.S. Treasury Secretary Lawrence Summers pledged to make it an issue, indicating Friday that he believes securing a stable oil price and uninterrupted supplies of crude is in the national interest of the United States and of utmost importance to the well-being of other global economies.
"We've seen some indications that there may be some hoarding behavior, but there are many, many factors that influence oil prices, both with respect to the short run and over the medium term," Summers told reporters in Washington. "But there's no question that -- as in any freely trading market -- there's a psychological element that enters in from time to time."
His remarks followed by a day U.S. Vice President Al Gore's call for President Clinton to tap the government's emergency reserves to bring down oil prices. Gore is urging the White House to release emergency stockpiles from the Strategic Petroleum reserve - a 571-million-barrel reserve that hasn't been tapped since the Gulf War, when Iraq and Kuwait stopped pumping oil.
The G-7 meeting will be followed by two days of committee meetings of the panels responsible for policy at the global lenders, and then three days of formal annual meetings, where officials deliver speeches on their respective economic developments over the past 12 months. Members from all 182 countries in the IMF and World Bank will have their moment in the spotlight.
Protests expected
Of course, getting to and from the German embassy Saturday and into the Prague Congress Centre could prove to be just a significant a challenge for ministers, officials and the press. Protests against the IMF, the World Bank and the G-7 are expected to gear up through the weekend, with thousands of demonstrators converging not far from the embassy.
 At least that's what some 11,000 Czech police are expecting. So far, Prague has been exceptionally quiet, with only about 60 protesters having officially "checked in" to the Strahov stadium perched on a hill above the city; the Soviet-era stadium is prepared to receive approximately 6,000 people over the next five days, the bulk of them next Tuesday when demonstrators plan to blockade the convention center.
Already, Czech police have blocked off many of the cobblestone streets and roadways in and around the congress center, which sits above a hill to the south of the city. Checkpoints have been placed anywhere that a car or person could fit by, and police plan to move the barricades even further back through the weekend.
Even with what appears to be airtight security, officials are still concerned that demonstrators will succeed in their plan to block delegates and officials either into or out of the congress center.
"It will be a significant challenge for the authorities, but we feel we are prepared," said Zdenek Hruby, the Czech government's specially appointed commissioner for the annual meetings. "We can only hope that events are peaceful and that the meetings can continue as they have been planned." 
|
|
|
|
|
 |
|
