Jacques Santer, president of the Commission, proposed at a meeting of European finance ministers in Verona, that countries which are not ready to join monetary union in 1999 should be given a new target of 2002.
It is already envisaged that 2002 should be the year when euro notes and coins start to circulate. Given doubts about whether France and Germany will meet the current 1999 deadline for the EMU launch, 2002 could now become fixed as the most likely fallback date for all countries.
When planning for the single currency began, key figures in the Commission favoured a "big bang" approach to the single currency launch, in which the changeover would happen at all levels of the economy and as notes and coins are introduced. The Commission has also favoured beginning monetary union in as many countries as possible at the same time. Brussels favoured the "big bang" idea because it would convince the public of the irreversibility of the process.
The idea of delaying monetary union until 2002 - in order to ensure EMU is more convincing when it happens - would therefore have a clear logic in the view of the Commission.
Commission officials in Verona insisted that the new 2002 target date for latecomers should not be viewed as an attempt to prepare the ground for a possible delay. Rather, they insisted, the idea was to maintain impetus for countries not ready to join in 1999 by giving them a new date to aim for. The Verona meeting also heard plans for Brussels to impose strict new rules and penalties, aimed at placing pressure on countries to bring their economies into line with the Maastricht convergence criteria. This process could not be open-ended, Commission officials insisted. "We expect them all to be in [monetary union] by 2002," said one senior aide to Mr Santer.
None the less, analyses of the implications of a delay tend to be stark. Karl Otto Pohl, former president of the Bundesbank, tells BBC TV's Panorama tonight: "It looks very much as if it [EMU] will be postponed... A delay could easily lead to the end of it, because it is a matter of credibility." He warns that this could lead to a "major political crisis in Europe".
Separately, Europe's finance ministers insisted that John Major must commit Britain to join a European exchange rate mechanism (ERM) if the Prime Minister wants Britain to have a chance of joining the single currency. The ministers agreed that Britain should have been a member for two years before joining if it is to have a chance of qualifying for EMU.
The Verona meeting agreed to establish an `ERM II' for those countries which do not join the single currency at the launch. An ERM for the countries outside EMU is deemed essential to ensure a stable relationship between the so-called "ins" and "outs" and to prevent disruption of the single market.
Kenneth Clarke, the Chancellor, attacked suggestions that Britain must join the ERM as "ludicrous", saying there was "no legal basis for such a move".
Until now, the question of whether ERM membership is a condition for countries wishing to qualify for EMU has been unanswered. The Maastricht treaty states that one of the conditions for entry is: "Observance of the normal fluctuation margins provided for by the exchange rate mechanism of the European monetary system, for at least two years." According to Mr Clarke, this does not mean obligatory membership of the ERM, but simply observance of normal fluctuation bands.
Gavyn Davies, page 19