What Wim did for Europe

2nd August 2005, Comments 0 comments

His lanky figure, nest of hair and off-the-cuff remarks reminded many of a crazy professor. Yet as Wim Duisenberg is laid to rest this week, Europe should acknowledge his role in creating the euro currency.

As Wim Duisenberg's body was brought back to the Netherlands for burial this week, the cortège was accompanied by many warm tributes from Europe's leading politicians for the major role he played in the successful introduction of the euro currency.

It is hard to imagine, therefore, that traders and the media often portrayed Duisenberg as "Dim Wim" and a clumsy "Euro-gaffer" who was more of a clown than a serious banker when he ran the European Central Bank (ECB) during the crucial period when 12 countries adopted the euro.

Accident prone?

Wim Duisenberg: My creation!

There is no denying Duisenberg — who died at the age of 70 on 31 July 2005 — occasionally put his large foot in his mouth. As a banker, he should have known that the mass hysteria that passes for rational thought on the international currency markets would have difficulty with his off-the-cuff quips.

For example in October 2000 a journalist asked whether a currency crisis caused by a war in the Middle East would justify the central bank intervening in the foreign currency markets. "I don't think so," replied Duisenberg, provoking a record low for the euro against the dollar.

Duisenberg could also be annoyingly precise. Annoying that is for European governments who preferred to push the ECB for interest rate cuts to stimulate their flagging economies rather than pursue more fundamental reforms themselves.

On one occasion he answered a call for interest rate cuts simply: "I hear but I don't listen".

His second wife, Gretta Duisenberg, managed to steal the limelight on occasion with her vocal denunciations of the International Monetary Fund, on whose board her husband sat for many years.

In more recent times, her campaigning for the Palestinian cause has created a storm. On one occasion, she famously hung a large Palestinian flag from the balcony of their Amsterdam apartment. The couple's Jewish neighbours were not pleased.


So why was Duisenberg appointed as president of the ECB in 1998?

The easy answer would be Franco-German rivalry. Paris wanted Jean-Claude Trichet, the head of the Banque de France  to get the ECB post; Germany wanted the job too but knew their nominee would not wash with the French so instead it opted for Duisenberg.

Both the French and the Germans felt Duisenberg was in the German camp.

As head of the Dutch central bank (DNB) from 1982 Duisenberg aligned the Dutch Guilder to the Deutschmark and followed the Bondesbank's tough monetary policies. Thus, he played a significant role in turning the Dutch economy from one of the weaklings to star performers in Europe.

When appointed Dutch finance minister in 1973 Duisenberg had employed more left-wing tax and spend policies — a mistake he did not intend to repeat later in this career.

Another answer would be that Duisenberg was the right person in the right place at the right time. His performance as head of the DNB earned him much praise internationally and set him up for the posting to the ECB.

Stability and cation were his watchwords, and despite some slips of the tongue, the approach has ensured that the euro has earned its place among the leading international currencies.


Duisenberg's crowning success came in January 2002 when the euro coins and notes replaced the national currencies in 12 European countries. Many cynics predicted disaster: the total breakdown of European financial systems was nigh, we were warned.

Yet as the public tentatively accessed ATM machines at 12.01 on New Years Day, euro notes appeared effortlessly.

Shops and bars and restaurants were accused of profiteering by raising prices to coincide with the introduction of the euro — but the changeover, led by Duisenberg, worked like a charm.

Duisenberg was the public face of the euro and he was as proud as any father of a newborn child. "Central bankers are not supposed to have emotions or dreams. Forgive me if I make an exception today for this in which the flow of history is present," he said when the notes were first unveiled in 2001.

Gretta Duisenberg made no secret of her political leanings

During his five years as ECB president, Duisenberg drove through the introduction of the euro with conviction. And he annoyed politicians by refusing to take quick-fix monetary measures that would harm the longterm future of the euro.

For this, all Europeans should be grateful.

Then after five years as the head of the ECB, Duisenberg stepped down, announcing "enough is enough". This allowed Trichet — recently cleared of wrongdoing in a long running fraud trial — to replace him.

Whether Trichet and his successors will show the same single-minded determination to safeguard the currency used across Europe remains to be seen.

[Copyright Expatica 2005]

Subject: Wim Duisenberg

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