European Central Bank president Wim Duisenberg, now being criticized around Europe for undermining the euro, would certainly not win a popularity contest in Ireland. With a booming economy and inflation of over 6%, Ireland badly needs an interest rate hike to slow things down. But when Duisenberg breezed in and out of Dublin in September he made it clear that Irish inflation was an Irish problem and there was no room for further debate.
Members of the Financial services industry association who heard Duisenberg read a prepared text on the whys and wherefores of inflation were less than impressed. A correct interpretation of the Irish predicament could be life-saving for policymakers everywhere. And even though Ireland accounts for only 1% of eurozone GDP, a prolonged crisis or collapse would have serious implications for the future of the beleaguered euro.
But the Duisenberg line is that the ECB bears no responsibility for Irish inflation despite the fact that Ireland's membership of European monetary and economic union (Emu) means that it has effectively handed over monetary control to Frankfurt. "The single monetary policy can only be geared towards the objective of price stability for the euro area as a whole," he told the Irish.