French Central Bank to strengthen co-operation with RBI

New Delhi, May 18 (UNI) Visiting Governor of the Banque de France Christian Noyer today said his country will strengthen co-operation with the Reserve Bank of India, including greater information flow on currencies of the European Union, and institutions involved in micro- finance lending as well as training of personnel.

"We intend to hold seminars and symposiums with Central Banks of the Region", Mr Noyer said in his address to the Confederation of Indian Industry. The Embassy of France in India was a co-sponsor of the event.

Mr Noyer, who is on a five day visit to the country, is slated to meet the country's senior most economic and financial leaders and officials, including Minister of Finance P Chidambaram and RBI Governor Y V Reddy. The Monetary economy expert will also meet representatives of French groups in India.

The French Central Bank Governor's address was on the evolution of Euro and its implications for other countries as well as the EU, especially on the expansion of the currency.

Mr Noyer expressed himself against industrialised countries providing concessional assistance to developing countries like India, saying that they have been registering phenomenal growth rates. The solution to their problems lay in greater opening up of their economies and thus greater trade. The growth rates registered by them have been far in excess of those registered by developed countries, like France. The way out for developing countries was in setting their own house in order, such as issues of governance.

The statement of Mr Noyer has to be seen in the context of The Brandt Commission Report which had suggested that 0.7 per cent of the GNP of industrialised countries needs to flow to developing countries to get rid of their appalling poverty. It was construed as visionary as enclaves of prosperity cannot exist in an ocean of poverty. Besides, if incomes of developing countries expand then they will provide a market for goods and services of industrialised countries.

Mr Noyer said there have been difficult times for the European integration. The Treaty creating a Constitution for Europe was not ratified in 2005 and the future of political integration is still fraught with uncertainties.

He said much remains to be done in terms of structural reform, if the European countries want the same level of long term growth as other developed countries.

"Nevetheless, I feel very optimistic. And the reason for this optimism is the Euro," Mr Noyer remarked.

The Central Bank enumerated the benefits of Euro as follows: (a) Price stability has been the primary benefit. Over the last few years, inflation has stayed broadly in line with the price stability objective set by the European Central Bank, that is, inflation level below but close to two per cent over the medium- term; (b) European companies and households are reaping the benefits of of that credibility. Long term interest rates stand at a low level, 40 to 50 basis points below the level in the United States; (c) A benefit of Euro is that it gives a boost to financial integration in Europe; "As consequence, the Euro is becoming extremely attractive as a vehicle, a transaction, an investment and reserve currency," Mr Noyer said.

UNI