But besides fine food, the new currency might also have sent Duisenberg reaching for the occasional aspirin. Last winter Germany’s left-wing Finance minister, Oskar Lafontaine, tried to undermine the ECB’s independence with noisy calls for interest-rate cuts. He failed; it wasn’t until a month after Lafontaine was forced from office that Duisenberg made a cut. War in Kosovo led traders to sell the euro, pushing it close to what some thought a humiliating parity with the dollar. When the euro debuted, it was worth $1.18 and expected to strengthen. Stronger growth in Europe has revived the currency, but not to that level.

Mixed messages coming from the members of the ECB governing council were another teething pain for the ECB. Duisenberg had to struggle to make sure the bank spoke with one voice, even if with many mouths. Some market players liked to complain that, compared with the Bundesbank, the ECB was too unpredictable.

On a snowy November morning, sitting in blue suede chairs on the 35th floor of the ECB tower in Frankfurt, Duisenberg described his first year to NEWSWEEK’s Karen Lowry Miller and Friso Endt. Excerpts:

NEWSWEEK: What have you accomplished in your first year? DUISENBERG: We have launched the euro in an extremely smooth way. We are still in the process of forging a single system out of 11 existing autonomous central banks. It is a tedious task, but so far it is going extremely well.

You have been criticized at times for an inconsistent message. Is this fair? I think it is unfair because to my mind our messages sent out to the market on economic developments and the monetary-policy reactions to them have been very consistent. But we have some difficulty in getting across our message of what our monetary-policy strategy is.

Why? Because of the strategy itself. I mean, our aim is unambiguous. Our monetary policy is to preserve price stability inside Europe. But our strategy is not direct inflation targeting, nor is it targeting of the money supply. It is a strategy based on two pillars. We follow monetary developments. [And we] assess economic developments based on a very broad range of economic indicators.

You are now willing to give out forecasts, but in the beginning you weren’t. No, I’ve always said there will come a point when we will publish forecasts. It will not just be a pure and simple inflation forecast. And it will not necessarily be very frequent. We have in our policy a medium-term outlook of one to two years. We do not react to short-term volatile movements in the euro zone. We have a learning process in making forecasts. I expect that we will be in the position to publish them in whatever form in the second half of next year.

What about other transparency demands, such as publishing minutes of the council meetings? Alan Greenspan would never hold a monthly press conference. I think we are more transparent than any other central bank in the world. I give every month a press conference starting with a carefully drafted introductory statement which is a reflection of the discussion that has taken place in the governing council. We have a question-and-answer session in which I believe we are very open. So I would not know what publishing the minutes would contribute except confusion.

Would you have been disappointed if the euro had reached parity with the dollar? No. But had it happened it would have been short-lived. There are many reasons for the euro to strengthen, but I can’t think of any reasons for the euro to become lastingly weaker. For example, growth now is pretty apparent in Europe. Growth will at some point slow down in the U.S.

How do you build the euro as a reliable “brand” for the markets? Of course, the euro has to earn its credibility. But that is not something that you acquire in one blow. Confidence can only be established when it is based on a track record of performance. To build up a track record by definition takes time, so that as long as the people can remember we have established stable prices.

How long do you think that will take? Oh, it may take years to build up such a track record. We will be judged on whether we have price stability. When the public thinks, “Yes, they do deliver,” then we will have succeeded in firmly establishing the euro in Europe.

Will you still be there then? I hope so.

Do you support calls for targeted exchange rates to smooth financial instability? I think they should be avoided. It would require that countries put all of their economic policies in the service of the exchange rate. Neither in the U.S. nor in Europe are government and monetary authorities prepared to accept this.

What did you achieve by coming out with a big rate hike on Nov. 4? What we did achieve and what we wanted to achieve was to create the feeling in the market that another move should not be expected for a considerable period of time.

How did this help your reputation at the end of your first year? We started changing the direction of our thinking and our comments in mid-July. We didn’t want to take the markets by surprise, because after our unexpectedly large [rate] cut on 8 April, the question arose, “Is it the policy of the ECB to take the markets by surprise?” So we explicitly prepared the market to show that surprise is not our policy. What we want most of all is to be predictable and credible. You only can be credible if you are predictable.

Did you take asset prices into account when you raised rates? What precisely are you looking at? Stocks? Real estate? Yes, we are looking at all of that. But they are very difficult to measure. It is very different in various parts of Europe, so we do not have a simple figure. But without a doubt the strength of consumer demand is fed by the so-called wealth effect. People feel richer because their house and their stocks are rising in value. But that is temporary.

The United States just raised rates to what is considered a neutral level. Will this encourage you to raise yours again to a more neutral stance? We don’t know what the neutral level is. Neither does the Fed know precisely, I assume.

How do you assess the pace of structural reform, such as labor flexibility, in Europe? There is not one single reform package yet. In some countries it goes very slowly. That is the reason why we keep attacking and putting all the pressure on governments, to keep them at their jobs.

Many retailers want to get their hands on the euro before Jan. 1, 2002, to get used to it. Do you agree? Yes, for logistical reasons, we can make banknotes available one or two weeks earlier to banks or supermarket chains, provided we have the guarantee that they will not be distributed among the public before Jan. 1 [2002]. The big danger is that it would create confusion, and it could advance the chance of counterfeits coming into circulation. We are encouraging countries to issue coins a few days early, and we also support every effort to make the period of dual circulation as short as possible.

What about shortening the time period for using dual currencies, which was originally six months? That is up to the national authorities. But what is being underestimated in most places is the pure size of the technical effort it requires to rebuild, for example, all the automatic-teller machines, all the machines ranging from cigarettes to postal stamps to parking meters. That is a pure technical effort and will require some time.

Is the ECB ready for Y2K? The Millennium Bug is well under control. We have completed tests with hundreds of private banks with great success.

Where will you be on New Year’s Eve? Home in Amsterdam. But we will have quite some staff here, and I will be back before the markets open in Tokyo.