Mike Collier in Riga -

An unlikely battle for the future of Europe's money took place in the Latvian capital Riga on October 12. At the annual conference of the Latvian central bank held in the slightly past-it Daugava hotel, European Central Bank board member Jurgen Stark issued a series of grave warnings and demands for Europe-wide control of both monetary and fiscal policy in a dour succession of PowerPoint slides. On the other side of the water at the far swankier Bergs hotel, the flamboyant mayor of Ventspils, Aivars Lembergs, beamed as he opened an attache case full of freshly printed notes as he announced the arrival of the "vent" - his port city's brand new unilateral currency.

Since handing in his resignation on September 9, the influential Stark has shown little inclination to shut up before his replacement is found, and took full advantage of the opportunity to blast the US for blaming the world's current economic woes on Europe, saying: "All those who give advice to the Europeans should get their own house in order before they give advice."

While the newswires buzzed with every word of Stark's suggested solutions, including his demand for a "major strengthening of the rules which govern economic and fiscal policies" and the formation of a "European finance ministry with direct powers to interfere in national budgets," which would "require the transfer of national sovereignty," they ignored the jollier proceedings at the Bergs.

But the contrast between the moustachioed German's flag-waving for "supranational" solutions with more than a hint of authoritarianism about them and the light-hearted launch of the vent (convertible at a rate of 100 venti to the lat, forex traders) has a deeper significance today than just a simple marketing gimmick designed to draw tourists to Ventspils, which with its huge commercial port and oil terminal may not be the most obvious destination for a weekend break, but which works overtime to make the most of what it does have (kids' playgrounds, a beach, castle and open air museum).

As mayor for the last 20 years, Lembergs is the virtual Doge of Ventspils and while he is generally despised by the chattering classes of Riga as one of Latvia's "oligarchs," he retains a genuine following in his coastal fiefdom despite his involvement in court cases in Latvia and the UK centring on corruption and fraud charges.

The secret of his popularity is simple: the streets of Ventspils are clean, the police carry out regular patrols, and the hospital and schools are decent. Plus he has the common touch, as his jokey exchanges with journalists while posing next to his case full of cash showed.

But the launch of the currency is just part of what Lembergs tells bne is, "The concept of a state within a state."

"The city prides itself on its own flag, its own language and even its own time zone, which is why the decision to introduce the vent seems self-evident," he says, outlining what sounds almost like the revival of the medieval city-state and the very opposite of Stark's vision of cross-continental homogeneity.

"Marketing is marketing, but our city's philosophy is the philosophy of the family," adds Lembergs - and you can't get less supranational than that.