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Britain: Argentine Crisis Troublesome, But Manageable - 2001-12-21

The chief of Britain's central bank says he does not expect a major global impact from the financial collapse of Argentina.

Bank of England Governor Edward George says the world's financial markets have already taken into account the economic crisis gripping Argentina.

Mr. George told British radio that the crisis is troublesome, but manageable.

"It's been a tragedy that's been a long time coming. And I think, as far as its implications for the rest of the world is concerned, it's already been pretty substantially discounted. So, in that sense, I don't think it's too worrying. But, of course, coming in the current international environment, it's not welcome," he said.

Mr. George said British banks are in good shape to deal with any loses in Argentina. Financial experts say Spanish banks have some of the biggest exposure to bad loans in Argentina. However, they say the effects should be limited.

Commenting on another subject, Mr. George issued a note of caution as Britain considers whether to join the European single currency.

"I always say there are pros and cons in the economic situation. The pros being the nominal exchange rate stability in the much broader financial market place that we would be involved with. And the con is the potential risk of the one-size-fits-all monetary policy," he said.

Britain has chosen for the time being to remain outside of the euro zone. The government says it will put the issue to a referendum at an unspecified future date. Twelve European nations will adopt the euro single currency on January 1.