Battlelines drawn on EMU timing

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The Independent Online
THE battlelines between Europe's monetary policymakers became clear yesterday when France's Prime Minister backed an early move to a single currency while both the Bundesbank and the Bank of England rejected it.

Any attempt to force the pace of monetary union, before adequate convergence between countries had been achieved, would involve serious economic risks, said Eddie George, the incoming Governor of the Bank of England.

The turbulence within the ERM over the past six months 'points up the real dangers of moving ahead too quickly to a harder ERM', he warned.

The vice-president of the Bundesbank, Hans Tietmeyer, said: 'Premature steps towards EMU will be dangerous for all of us, if we do not have enough common ground and a realistic basis for monetary union.'

Since the establishment of the Maastricht timetable on EMU, it has become clear that the 'economic divergences between countries are greater than people then thought', Mr Tietmeyer warned.

But Pierre Beregovoy, the French Prime Minister, yesterday called yesterday for the acceleration of monetary union.

'If we could achieve a single EC currency before January 1997 (the earliest date advanced by the Maastricht Treaty) I would be doubly delighted,' he said. He indicated that he was prepared to bring forward plans to make the Bank of France independent.

The EC president Jacques Delors would not be drawn on the debate between Paris, Bonn and Frankfurt on a fast track for union but said the most important thing was to meet the Maastricht deadline.

In a reference to Britain, he warned that competitive devaluations had a 'boomerang' effect on a country later on. 'Adjustments should be carried out within the grid rather than by leaving it,' he said.

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