EMU `crisis over the euro'

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The Independent Online
The "unpopular euro" has become the focus for "a crisis of confidence in European integration", according to a Bundesbank board member. Speaking to a conference on monetary union in Otzenhausen, Germany, yesterday, Bundesbank official Peter Schmidhuber launched a strong attack on critics of German monetary policy and institutions, in particular the French.

Mr Schmidhuber criticised French proposals to set up a political counterweight to the European Central Bank (ECB). He said such arrangements were not provided for within the Maastricht Treaty, and complained that "the question has to be asked as to how seriously our partners are taking the ECB's independence".

Meanwhile the German Finance Ministry refused to comment on the hint made by another Bundesbank member that the Germans would veto the appointment of someone from France to head the new ECB. Helmut Hesse said on Thursday night that it was "absolutely impossible" that the first head of the new ECB would be French because each member of economic and monetary union will have a veto over the election.

Tensions between the French and German approach to monetary union have been evident for some time. However, the pressures for the two countries to resolve their differences and stick to the existing timetable for monetary union remain extremely strong.

According to a third member of the Bundesbank, speaking yesterday in Moscow, delaying monetary union would be bad for the German economy. Mr Welteke said: "We must assume that it would lead to a revaluation of the mark and that would have a negative influence on the export capabilities of the German economy at a time when unemployment is already high."