Farewell to a Central banker

Address by Dr. W. F. Duisenberg, President of De Nederlandsche Bank, on the occasion of Baron A. Lamfalussy's farewell as President of the European Monetary Institute, 30 June 1997.

Dear Alexandre,

1. Three and a half years ago, when you exchanged the premises of the Bank for International Settlements, an established international financial institution, for a couple of floors in a Frankfurter "Hochhaus", you took on a huge task. Your first mission was to set up the European Monetary Institute (EMI), more or less starting from scratch. Moreover, you were faced with the responsibility of managing the preparations for Economic and Monetary Union (EMU). It was not an easy decision to embark on a grand project like EMU, but putting the flesh on the bones of monetary union is even more difficult. To be honest, at that time I would not like to have been in your shoes.

2. On both accounts you did a great job. The EMI is currently a thriving organisation. The Institute started off with a handful of staff, more or less taken over from the Secretariat of the Committee of EC Central Bank Governors. At present the EMI employs more than 200 people. Before the EMI was established, you had to take seemingly trivial decisions, like choosing suitable furniture for the meeting room of the EMI Council. At an exhibition of furniture on the 36th floor, you immediately picked the smallest chair available, I was told. Indeed, your modesty graces you, but looking at my size, and I'm sure I also speak on behalf of some other colleagues, I'm glad you eventually picked a larger one.

3. With respect to the preparations for EMU, both the EMI as well as the central banks are on track. Indeed, as far as we are all concerned, EMU can start on 1 January 1999. Hence, you also made things easier for me. You have played the ball from the tee to the green, thus leaving me the "easy" task of putting it in.

4. Alexandre, I don't think we are able to play a birdie or an eagle, let alone a hole-in-one. But I promise you, we will play on par. And I can tell you, I've done worse. Things have not always been easy for you when chairing the meetings of the EMI Council. But being a central banker, heart and soul, you have always managed to find compromises. I vividly remember a few meetings of the EMI Council which you eventually managed to conclude successfully, although they started off as a babel of tongues. Also when ever the atmosphere around the table started to become a bit tense, you always emphasised the need for co-operation and co-ordination. Indeed, in your opening statement to the Committee on Economic and Monetary Affairs and Industrial Policy on the European Monetary Institute in November 1993, shortly before you officially took office as the first President of the EMI, you stressed the importance of enhanced monetary policy co-ordination among Member States as a means of steering as smoothly as possible towards Stage Three of EMU. You also stated that the EMI can and should play a constructive role in promoting this process of policy co-ordination.

5. With the benefit of hindsight, everybody will agree that the EMI, under your management, has indeed contributed to a co-operative spirit among the EU national central banks. Indeed, as commentators often focus on the convergence of fiscal policies, which still leaves something to be desired, it is sometimes forgotten that the monetary conditions for the start of a monetary union between the Member States have never been so favourable. In your foreword to the 1996 Annual Report of the EMI you rightly observe that EU foreign exchange markets are moderately calm and long-term interest rates are low, while differentials have narrowed appreciably. But Lamfalussy would not be Lamfalussy if he did not immediately add some reservations. The risks and challenges should not be underestimated, although you see grounds for cautious optimism. Indeed, you would not be a central banker without writing that counter-inflationary vigilance remains essential, although monetary policy has - in your eyes - justifiably been eased against the overall background of subdued inflationary pressures.

6. One of your greatest assets is that you have managed to combine this typical conservative and cautious nature of a central banker, always focused on substance, with your firm belief in European monetary integration. Having been a member of the Delors Committee for the Study of Economic and Monetary Union, you were at the cradle of European monetary union. You have never believed that a true single market is in the long run compatible with a quasi-floating exchange rate system. Over the past three and a half years, you have acted as a devoted missionary of EMU and European integration in general. In this capacity, you have managed to convert at least some incredulous European central bankers. And like any good missionary, you have also spread the message of EMU to the outside world. Over the last few years, you have held 67 official speeches and appeared in public on many other occasions, in total approximately 175 times. Indeed, you have beaten me there. A few days ago, when I took leave of the staff of De Nederlandsche Bank, I was reminded of having "only" held some 155 official speeches during my presidency of more than 15 years.

7. Dear Alexandre, good wine needs no bush, as we say in the Netherlands. But some wines have such a delicious and well-balanced taste that they cannot remain unnoticed. The "Chateau Lamfalussy", mis en bouteille in 1929, is one of them. I am very grateful to you for leaving me a smoothly functioning and high quality institution, which the EMI currently is. And I wish you and your wife all the best.