CITY AND SUBURBAN
Keep it simple, Mr McDonough you're talking to the CBI
CHRISTOPHER FILDES
What has long worried me most about the Confederation of British Industry is that it may represent its members. Here they are again, meeting in Birmingham and grumbling about being expected to pay div- idends. (How much easier business would be if shareholders would just put up and shut up.) The CBI's latest Euro-survey of its members shows that more than a quar- ter of them think a single currency is neces- sary for a single market. Next year Howard Davies, their ambitious director-general, should arrange for a central banker to explain to them the simpler facts of eco- nomic life. William McDonough, who heads the Federal Reserve Bank of New York, has a suitable speech in rehearsal and was making it only the other day. Canada and the United States, he pointed out, formed their own free trade zone five years ago. Today they have the biggest trading relationship of any two countries in the world. They are committed to working together, even though, Mr McDonough says, they will not always see eye-to-eye on all issues — 'differences of view are, after all, to be expected in relations between sovereign nations'. Differences on the exchanges, too. The Fed has not thought it necessary to merge the US and Canadian dollars. Just as well, now that the North American Free Trade Area has expanded to include Mexico. Imagine a two-dollar peso whose empire had to stretch from Hudson's Bay to Yucatan! Almost as absurd as insisting on a single currency from Lerwick to Palermo, in the name of a single market. This market was supposed to be complete two years ago. The barriers, according to a Bank of England Euro-sur- vey on financial services, are regulatory, fis- cal, structural, legal and cultural: not, you will notice, monetary. Indeed, for a central banker with a cool view of the prospects for a single currency, Mr Davies need look no further than the Governor.
Previous page
