The warning from Karl-Otto Pohl coincided with new figures showing that government borrowing last year had overshot the 3 per cent of GDP ceiling by more than expected. Theo Waigel, the German finance minister, said: "The budget result makes it clear what a difficult situation the federal finances are in."
He added that to meet the limits set out in the Maastricht Treaty, the government would have to continue to find savings "with greater determination".
Mr Pohl, speaking at a conference in Paris, said he still expected monetary union to be launched on time. But he said: "It could still be possible that the whole exercise will be postponed or may even fail."
He said that without a significant pick-up in growth, Germany was unlikely to get its budget deficit below 3 per cent of GDP. This threatened the launch of the single currency because the German public would lose confidence if the Maastricht criteria were fudged.
Opinion polls show that the majority of Germans are opposed to monetary union. Many believe the new Euro will not be as strong as the mark.
Mr Pohl, now a director of private bank Sal Oppenheim, also criticised French efforts to make sure the European Central Bank would be under political control, saying its independence was essential.
Figures published yesterday showed that the German budget deficit amounted to DM78.3bn last year, DM18.4bn above target. Far lower-than-expected tax revenues meant the shortfall amounted to 3.9 per cent of GDP, well above the Maastricht target.
Most forecasts, including those published by organisations such as the OECD and IMF, suggest that this year's deficit - the decisive figure for membership of the single currency - will be very close to 3 per cent.
But some economists are much gloomier about prospects for the country's growth this year, and predict that the German government will struggle to meet the ambitious target it has insisted on more vociferously than anybody else.
Mr Pohl said Germany was in a difficult situation, having told both its European partners and the public that the criteria must be interpreted strictly. "I have no idea how the government will solve this very difficult problem," he said.