Germany takes hard line on central bank

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The Independent Online
GERMANY took an aggressive stance on European monetary union yesterday as two senior ministers demanded that the future European central bank be situated in Frankfurt.

Theo Waigel, the Finance Minister, threatened to dash any remaining hopes of EMU unless Germany got its way on this issue.

Asked in an interview published yesterday by Focus magazine where EC monetary policy would be run from, Mr Waigel said: 'From Frankfurt of course. We will make very clear to our partners, either the European central bank comes to Frankfurt, or this whole business will come to nothing.'

The minister's unusually uncompromising words reflected the Bonn government's determination to raise the pressure on its partners ahead of a special European Community summit in October, when the location of the central bank's precursor, the European monetary institute, should be decided.

Britain, which has been campaigning on behalf of London as an alternative site, is believed to be the main obstacle in the way of Germany's ambitions.

The new German tone may also reflect concern that the recent turbulence in the European exchange rate mechanism - unleashed by the Bundesbank - may have cost Frankfurt some support among European partners.