Computer snags hit euro system

WIM DUISENBERG, president of the European Central Bank, yesterday blamed computer teething troubles for difficulties with the new euro settlement system.

The euro dropped a cent in value to $1.155 against the dollar in New York late on Wednesday, with traders blaming the inability to sell the new currency quickly enough due to poor liquidity. This suggests that Europe's central banks had earlier stepped into the market to prevent volatility.

Target, the system for settling transactions in euros between banks, was forced to close half an hour late last night in order to process large volumes of transactions. But Mr Duisenberg, speaking after a meeting of the ECB's governing council, said this was not due to operating problems.

"Overall, during the first days of operation, the Target system has functioned well," he said.

He said the value of cross-border transactions settled through Target had exceeded 310 billion euros on the second operating day.

Christian Noyer, the ECB's vice president, said the problems had been human rather than technical, and all had been resolved in a short time.

As expected, the ECB left Euroland interest rates at 3 per cent yesterday. Mr Duisenberg said: "We can see no tendency to force us to change interest rates in the future as far as we can see."

He added that there were uncertainties facing the world economy. This had weakened business confidence in Europe.