BANK OF ENGLAND'S GEORGE PLAYS DOWN TENSIONS IN EURO ZONE.

The Bank of England's Governor Eddie George said on May 27 that perceptions of tensions within the Euro zone caused by last year's global market turmoil were exaggerated. Speaking to a House of Lords committee, Mr George also said it was "tremendously difficult" to anticipate how difficult it would be for Britain to fit into the single currency. "Just at the moment the Euro zone is suffering from the global demand shock in the same way we are, perhaps to a greater degree right now. But what you are seeing at the moment is a kind of exaggerated perception of how serious those tensions might be over the medium and longer term", the Bank of England Governor said. He also hinted he did not think the European Central Bank had cut interest rates enough: "Perhaps they have not compensated to the same extent by stimulating domestic demand in the same way that we have", he added.Mr George said the jury was still out as to whether the single monetary policy in the Euro zone since January 1 this year would be successful. "It's really too soon to tell whether all the participating countries will be able to exist comfortably within this single monetary policy framework or whether there will be tensions. They have the same potential for regional, sectoral imbalances but on a much larger, Euro-zone scale", he added. He said the issue, if Britain were to sign up, would be whether demand across the region as a whole could be kept in line with the supply side "without very serious adverse impact on component countries or sectors within component countries". He said if countries then found themselves stuck with high levels of unemployment...