ECB chief urges UK to join euro

WIM DUISENBERG, President of the European Central Bank, yesterday urged Britain to join the euro swiftly, adding that the arguments against UK entry were of a "psycho-political nature".

Mr Duisenberg told journalists in Frankfurt that it was in Britain's economic interests to take part in the single currency project, although entry remained "a sovereign decision".

Speaking at the ECB's headquarters, Mr Duisenberg said he hoped that the four EU countries still outside the euro zone - Britain, Denmark, Greece and Sweden - would join "sooner rather than later".

He added: "I happen to think that it would be in Britain's economic interests to be part of Euroland. The arguments against it are mainly of a psycho- political nature as I hear them.

"As we all know," Mr Duisenberg added, "this is very much a political question, a divisive question in the country."

However, the ECB President made a strong economic case for British entry, arguing: "If I put myself in the shoes of a UK resident, it would be in the interests of the UK to join the 11 others in adopting the single currency for the same reason that it was in the interests of the original 11 - making markets more transparent."

Mr Duisenberg added that outside the single currency Britain's "exchange rate instability will remain". It would be difficult for the UK's monetary policy to be tailored to take into account inflation and exchange rate movements: "Monetary policy can serve only one of these two goals," he added.

Exchange-rate volatility was identified as one potential obstacle to British membership of the euro. But Mr Duisenberg said that the UK might not be held to the letter of the Maastricht Treaty stipulation that currencies should have been members of the Exchange Rate Mechanism for two years before joining.