President sees strife in the EMI

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The Independent Online
THE European Monetary Institute, forerunner of a European central bank, has a difficult mandate because of ambiguities within the process leading to eventual monetary union, its president conceded yesterday, writes John Eisenhammer.

Speaking at the inaugural meeting in Frankfurt, Alexandre Lamfalussy hinted openly at the struggle between various European central banks over the role of the EMI.

There are known to be strong differences of opinion between those central banks, led by the Bundesbank, determined to see no seepage of their authority to the pan-European institution in the run-up to full monetary union, and others which favour the EMI gradually assuming a more active role in fostering common policies.

'The main difficulty lies in the fact that monetary policy decisions are a domain of individual central banks but, at the same time, individual central banks are asked to co- operate and co-ordinate better,' Mr Lamfalussy said.

While virtually ruling out the prospect of European monetary union by 1997, he said the pressure towards union was irresistible. 'With the degree of integration already reached in the real economy in Europe, monetary integration will follow.'

Suggesting that certain changes would be needed in the next few years, he said: 'We cannot look at the present situation as a stable, perfect balance until one moves into a blissful state of monetary union.'

He spoke of the possibility of a smaller group of countries moving more quickly towards closer monetary co-operation. The EMI is unlikely to set up permanent operations in Frankfurt before the autumn. It will start with a staff of around 140.

Maurice Doyle, Governor of the Central Bank of Ireland, was elected vice-president of the EMI by the council, comprising the 12 European central bank heads.