As the euro slumped towards a record low against the dollar yesterday, currency watchers were in no doubt about who was to blame - Mr Wim Duisenberg, President of the ECB and the chief guardian of Europe's single currency. The sell-off was triggered by an interview with the London Times during which Mr Duisenberg was asked if central banks should intervene in the market if a war in the Middle East caused a sharp change in currencies. "I wouldn't think so," he replied.
For the markets, these four words represented a signal to sell euros, secure in the knowledge that the ECB and its partners in the United States and Japan were not planning an intervention similar to last month's move that appeared to halt the euro's decline against the dollar.
This is not the first time that the ECB President's penchant for plain speaking has landed him in trouble. A remark he made last month about harmonising Europe's pension systems was interpreted by Danish anti-euro campaigners as a threat to Denmark's state-funded welfare system.
Mr Duisenberg's candour is, in fact, one of his most attractive qualities and his straight answers to difficult questions at his monthly press conferences have helped to blunt criticism of the ECB as a remote, secretive institution. After almost two decades as a central banker in the Netherlands and in Frankfurt, however, the ECB President might be expected to show more caution in the face of today's volatile foreign exchange markets.
Besides unsettling the markets, Mr Duisenberg has upset politicians in a number of EU member-states by sounding off on political issues that are not, strictly speaking, his concern.
Irish officials were privately scathing about the ECB President's recent speech in Dublin when he appeared to give the Government a finger-wagging lecture about inflation. As one Government aide pointed out, part of Ireland's inflation problem is due to the euro's weakness - a phenomenon for which Mr Duisenberg himself must share some responsibility.
The chain-smoking Dutchman annoyed the German Chancellor, Mr Gerhard Schroder, last year when he lambasted Mr Schroder's decision to bail out a debt-ridden construction firm in order to save 15,000 jobs. And Mr Duisenberg's relentless calls for more economic reforms in the euro zone have sometimes appeared to ignore the business-friendly measures introduced by a number of governments - often at considerable political risk.
Mr Duisenberg's indifference to the sensitivities of European politicians is all the more surprising in view of the fact that he served as his country's finance minister before he became a central banker. As a member of the most spendthrift Dutch government since the second World War, this former leftwinger responded to the oil crisis in the mid-1970s by increasing public spending until it reached 55 per cent of GDP in 1975.
By the time Mr Duisenberg became governor of the Dutch central bank in 1982, he had become converted to the virtues of sound money as embodied by the austere monetary policy of Germany's Bundesbank. He pegged the guilder to the Deutschmark, ushering in a period of low inflation and low interest rates that transformed the Netherlands from one of Europe's economic disaster zones into a spectacular success story, enjoying steady economic growth and low unemployment.
Mr Duisenberg, who is 65, said yesterday his age made it unlikely he will serve a full eight-year term as ECB President. Frankfurt gossip has long suggested he will step down in 2002, shortly after euro notes and coins are introduced.
Mr Duisenberg, who enjoys playing golf, reading novels and listening to country and western music, will have no difficulty occupying his days once he retires. Yesterday's events may have brought those carefree days a little closer.
