Alexandre Lamfalussy, a Hungarian refugee from communism who emigrated to Belgium with a few dollars in his pocket and went on to become a founding father of the euro, has died. He was 86.
Lamfalussy died May 9, according to Belga, the Belgian national newswire, which cited his family. No cause was given. The European Central Bank acknowledged the death in a statement.
Lamfalussy was the first president of the European Monetary Institute, a short-lived institution created in 1994 with the sole purpose of setting up the ECB and then willing itself out of existence.
“He foresaw the essential need for financial integration in Europe to go hand in hand with monetary integration and actively drove this process forward,” the ECB said.
First an academic economist, then private banker and finally a central banker, Lamfalussy defended the euro as a risk worth taking after the sovereign-debt crisis that came close to shattering the currency.
“The European Union couldn’t exist without monetary union,” he said in memoirs published in 2013. “We had to do it the hard way, resolutely.”
Lamfalussy’s role in forging a path to monetary union began in 1976 when he embarked on a career at the Bank for International Settlements, the Basel, Switzerland-based clearinghouse for the world’s central banks. He was promoted to BIS general manager in 1985 and, three years later, joined a committee of central bankers who sketched a road map for the European currency. They included a future president of the ECB, Wim Duisenberg, and Carlo Azeglio Ciampi, who later became Italian prime minister and president.
Turning the road map into reality became his job when the EMI was established in Frankfurt, home of the German Bundesbank, then Europe’s dominant interest-rate-setting institution.
The Bundesbank loomed so large over Europe’s economy that Lamfalussy had to crawl out from under its shadow. After the EMI’s first meeting in January 1994, he told reporters: “I shall not accept a greater influence from the Bundesbank than if I had been sitting on the top of a mountain somewhere else.”
In practice, the Bundesbank held sway in the setting-up of the ECB. Germany’s monetary philosophy, scaffold of interest rates and definition of inflation became part of the ECB’s toolkit. Lamfalussy said in his memoirs that he was approached to be the first head of the ECB, but declined because he was nearing 70.
Born on April 26, 1929, in Kapuvar, Hungary, Lamfalussy fled his homeland in 1949 as the Iron Curtain was sealing off eastern Europe. With three friends, he snuck across the snowy border to Austria, en route to a Belgian university scholarship.
Lamfalussy studied economics at Catholic University of Leuven and obtained his doctorate from Oxford University in 1957, the same year that six western European countries signed the Treaty of Rome, the nucleus of today’s European Union.
Monetary expertise led to the post of economic adviser at Banque de Bruxelles, a private bank. Lamfalussy became chairman of the bank’s executive board in 1971, stepping down after losses on unhedged foreign-exchange trades threatened the bank’s survival.
“Monitoring was not part of my remit, but I shouldered the political responsibility,” he said in the memoirs. “I didn’t have a highly developed criminal imagination.”
Lamfalussy married Anne-Marie Cochard in 1957. The couple had three children. Belgium awarded him the title of baron in 1996.