When there is turmoil in the financial markets, the monetary committee is called on to decide on a realignment. But it meets all year round in less stressful circumstances. It is one of the ironies of the present crisis that only a few weeks ago the committee put its name to a report that said the European Monetary System was sound and needed no fundamental reforms.
During moments of crisis, the meetings are attended by what passes in Brussels for high drama. The S-class Mercedes, Daimler Sovereigns and other limousines come roaring up. Confused men in dark suits emerge blinking into the television lights. They deliver a few platitudes, then disappear inside, emerging hours later to announce a currency realignment.
The monetary committee, for all intents and purposes, holds the reins of the EMS. It is composed of officials from central banks and finance ministries, two from each country. It is currently headed by Jean-Claude Trichet, director of the French Treasury. Britain's members are Andrew Crockett from the Bank of England and Sir Nigel Wicks from the Treasury.
The monetary committee was set up by the Treaty of Rome in 1958, long before the EMS was even a glint in anybody's eye. Article 105 says it has 'advisory status', and lists its tasks as: 'to keep under review the monetary and financial situation of the member states' and to deliver opinions to the Council of Ministers and the European Commission. But it was not until the birth of the EMS that the committee came into its own, as the principal technical body charged with making the system work.
The Maastricht treaty will expand the role of the monetary committee, giving it a voice in the preparation of the path to a single currency. But at the beginning of the third stage, when exchange rates are fixed, it is to die. An economic and financial committee is to follow, which will include members of the future European Central Bank.
Even before that, it has recognised its limits. The crisis that threatened the EMS on Friday was so severe that it has been forced to call in the ministers, who gathered yesterday in the same building.
Yet the committee's recent report said the system had no major flaws. It encouraged more realignments, said that currency intervention should be limited, and advocated a system of 'warning lights' to guard against another crisis such as that which precipitated the exit of of the pound in September 1992. The only call for change was for increased communication.
Given that its primary mandate is to 'promote co-ordination of the policies of member states in the monetary field to the full extent needed for the functioning of the common market,' the last few months cannot be said to have been an unalloyed success for the committee. In simple terms, it has failed.
Yet it is impossible to know how, or why, or whether anything might have been done differently, because the committee publishes no details of its meetings, or even a list of participants. It has a phone number but no one will take calls.Reuse content