Ministers debate return to a narrow-band EMS

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The Independent Online
BRUSSELS - A return to narrower bands in the European Monetary System at the end of this year is under discussion, according to officials in Brussels, writes Andrew Marshall.

The talks are part of attempts to resuscitate plans for a single currency. Britain has an opt-out from monetary union, but any revival of the idea before the June European elections would be embarrassing for the Government, which has claimed the issue was dead.

Last year, currency turmoil forced participating members to abandon the narrow bands within which currencies could fluctuate either side of a central value. This was changed to much wider bands of 15 per cent. Since then, however, the core currencies in the system have regrouped, and some countries have argued for the need to plan for something closer to the old system.

Informal discussion of a return to narrow bands has started among the finance ministries of some governments, including France, Germany, the Netherlands and Belgium.

Yesterday, the European Union's monetary committee discussed currency bands in the context of monetary union, which prescribes that member currencies must have been in 'normal' fluctuation bands for two years.

Several governments argue that the wide bands cannot be considered 'normal' and that new steps must be taken before the move to a single currency.

The end of this year is being touted as a possible date for shifting to a tighter regime in the EMS.