A question of prudence

The same way that I was critical of the speech which the governor of the Central Bank of Malta delivered to the Institute of Financial Services, I found commendable the manner in which he went into the implications and impact of Economic and Monetary Union (EMU) on EU applicant countries during a recent Gozo University seminar.

I say so because without taking sides or positions or else presenting that particular option as the only viable option he tackled the subject matter from a purely technical point of view, without denigrating any alternative options that may exist.

Last week I had occasion to attend an EU Commission seminar on the euro in Brussels which was attended by MPs from the various candidate countries. The subject was tackled more at a technical than a political level. Even the panellists were bureaucrats, rather than political figures. In fact the seminar was organised by TAIEX, which provides technical support and assistance in "educating" people about the mechanisms of the European Union.

I was intrigued by the approach which the British representative of the Permanent UK Delegation to the EU adopted when he was quizzed over the euro issue - a delicate and sensitive matter over which not only his country still has to decide but also an issue which seems to be creating a rift between the Prime Minister and the Chancellor of the British government.

From the very outset he made it clear that he did not intend to enter into political terrain even on matters which might have sounded purely economic. All he did was elaborate on the five economic considerations or tests on which Britain shall decide its future at a referendum, with the understanding that if it so happens that the Treasury will consider it to have failed any one of the five key tests then the referendum will not be held at all.

When I asked him about the attitude of both the present and the newly appointed governors of the British Bank of England, he stated that although there will be some input from the Bank in the compilation of the Treasury report on the matter, final responsibility for its contents and conclusions as well as "ownership" of the document will belong to the latter.

Meanwhile he confirmed that while the present governor has adopted a neutral stance despite being known to be somewhat eurosceptic, the new governor is expected to be neutral on the subject, holding no publicly known views on the matter...

All this shows a high degree of political maturity and prudence as well as respect for the voters' sentiments, which stand to be easily swayed by such people in high positions who could easily influence their views. This apart, the British governors of the Bank of England seem to be very reluctant to allow political capital to be made out of their speeches on the subject - which explains the self-imposed silence resorted to.

All those who think that this is purely a British characteristic are mistaken.

When the deputy governor of the Sveriges Riksbank - the Swedish Central Bank - recently spoke in Germany in front of the Swedish Chamber of Commerce for Germany, she made it clear that, although the bank's board took a decision in favour of early participation in the EMU as a response to the government report on EMU membership - something which our governor was entitled to do and in fact did - and although several board members have personal views on EMU, the executive board of the bank deliberately has not taken any common position ahead of the referendum in Sweden. She resorted to such restraint in spite of her own pro-euro stance.

When she came to assess the Eurozone economy, she was so balanced that she admitted that during the economic boom in 1999 and 2000 the euro area lagged behind the US and Sweden in productivity increases. And during the downturn of 2001 and 2002 the Eurozone still underperformed the US and Sweden.

She had the courage to admit that this is the reality and of course on a very simplistic level something that makes poor publicity for EMU prior to the Swedish referendum.

In spite of personally being pro-euro, the deputy governor of the Swedish Central Bank showed so much balance in her approach that she stated that "so far I have concentrated on some of the disadvantages of joining the Monetary Union, but let there be no mistake, there will certainly be important gains from EMU for Sweden".

During the run-up to the EU referendum in Malta there will be many who will come forward to air their views. Private individuals have every right to do so, even if they are not political persons. So do constituted bodies so long as they will be faithfully reflecting the views of their members - irrespective of whether they are employers or trade unions.

What should not be done is for persons in key and sensitive areas of independence like the governor of the Central Bank to express themselves further on the issue in a lopsided way, even if couching their biased arguments in economic jargon.

That is the point I made a couple of weeks ago. It is the very same point I am reiterating today.

e-mail: leo.brincat@magnet.mt