EMU chances take on fresh impetus

The prospects for European Monetary Union emerged from the shadows this week as the Asian economies showed signs of recovery.

The spreads between German mark, securities and some of the smaller European currencies have widened slightly, reversing the long-term trend to convergence, but not enough to cause any real concern, and the view of the experts is increasingly that it is too late now to prevent the narrow EMU going ahead and political risky to stop the broad EMU, containing Italy, Spain and Portugal.

Bundesbank officials continue to warn everyone against complacency, but a legal move to have the German courts rule that replacing the mark is unconstitutional is unlikely to succeed and has not had much impact on the markets.

The simmering row between the Dutch and Italians is slightly more serious. But reports that for political reasons the Dutch Finance Minister would oppose Italian membership of the monetary union in the first wave have been played down in the past week.