Further doubt was cast on the feasibility of achieving European Monetary Union in 1999, when the chief economist of the Deutsche Bundesbank said Germany might itself not meet the criteria for eligibility to take part in EMU in 1997.
Otmar Issing, who is a leading figure on the Bundesbank Council, said that Germany itself faced problems given the big financial transfers still passing from western to eastern Germany.
According to David Marsh, director of European Strategy at investment bank, Robert Fleming, the statement by Dr Issing was potentially significant because it gave a further reason why the 1999 date might be postponed. "He is reverting to his original somewhat pessimistic forecast that Germany won't meet the debt/GDP or the budget deficit ratios by 1997," said Mr Marsh.
At a press conference in London, Dr Issing said that the excessive budget deficit procedures in the Maastricht Treaty once monetary union had occurred were not enough. "They are too weak, we need sanctions that are triggered automatically." He also said that the Maastricht Treaty implied that "in normal times the deficit will be lower than 3 per cent".
He also struck a distinctly sceptical note about the "discrepancy" between the move to a single currency and a supranational bank on the one hand and the "very preliminary elements" towards political union on the other.
In a speech to a conference organised by the Institute of Economic Affairs, Dr Issing poured cold water on the idea that the move to EMU would promote further political integration.
"If, for whatever reasons, agreement is not possible on effective joint action and on a state-building European order to underpin it constitutionally, how is it possible to expect the desired result to emerge automatically, as it were, through the catalyst of a single currency?"
He also attacked the idea that a single market requires one currency, a central plank of the European Commission's advocacy of EMU. "For the European Union as a whole," he said, "the argument of `safeguarding the internal market' by a rapid transition to monetary union is not convincing."Reuse content