Single currency to be policed by `stability council'

MARY DEJEVSKY

Laval

France and Germany have agreed on the formation of a "stability council" to police the operation of the single European currency once it has been introduced.

The agreement, along the lines of the "stability pact" proposed by the German finance minister, Theo Waigel, last year, was reached at a meeting of French and German ministers and central bankers yesterday and is likely to include financial sanctions against countries that breach the terms of the single currency once they have joined.

It would create a new tier of decision-making in the EU, beyond the present Council of Ministers - and countries like Britain, which do not plan to join the single currency, would be excluded from it.

The ministers - meeting in Laval, the home town of Jean Arthuis, the French finance minister, west of Paris - also called for a new European Exchange Rate Mechanism to prevent or discourage countries inside the European Union but outside the single currency from devaluing their currencies against the euro. It would allow for "intervention by the European central bank, with the euro as the anchor point," Mr Arthuis said.

France, in particular, has long expressed concern thatcompetitive devaluation by EU countries remaining outside the single currency - probably including Britain and Italy - could penalise those countries that have introduced the euro and jeopardise the project.

Last month, the French prime minister, Alain Juppe, went so far as to say that the single currency would not work without such a mechanism. Yesterday, however, in a gesture clearly intended to underline France's determination to meet the single currency criteria by the 1 January 1999 deadline, Mr Juppe circulated all government ministers and local administrations with instructions to ensure that their preparations for introducing the euro were on schedule to meet the target date of 1 July 2002.

The same message emerged from the French and German finance ministers' meeting, with upbeat assessments from both sides not only about their prospects of meeting the single currency criteria on time, but also about the "temporary" nature of the recent recession and the "hopeful" signs already manifesting themselves.

It was the stability pact, however, on which most progress seemed to have been made. According to Mr Arthuis, the pact would be controlled by a "stability council" comprising heads of central banks and finance ministers of the single currency countries.

The central bankers would be responsible for monitoring price movements and monetary policy in those countries, while the finance ministers would observe budgetary and monetary policy. "We are talking about a council made up of ministers in the third phase [of European monetary union]," said Mr Arthuis.

Any country failing to meet the original Maastricht criteria could be liable for sanctions. Mr Waigel said that he strongly favoured "automatic sanctions" because then they would not have be discussed with relation to a particular country. He stressed that the nature of sanctions was still under discussion and the strong inference was that the automatic principle was not acceptable to France.

This difference aside, Mr Waigel was clearly delighted by France's acceptance of his stability pact idea and stressed that it was intended "not to change the Maastricht treaty but to ensure that Maastricht criteria are observed over the long term".

Germany has continually expressed concern that countries might meet the criteria for joining the single currency by the1999 deadline, but that there was then no mechanism to prevent them from backsliding.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
REX/Eye Candy
science
News
A photo of Charles Belk being detained by police on Friday 22 August
news
News
i100
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
tech
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
News
i100
News
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
tv
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

Front-End Developer (JavaScript, HTML5, CSS3, C#, GUI)

£55000 - £70000 per annum + Benefits + Bonus: Harrington Starr: Front-End Deve...

Graduate C# Developer (.NET, WPF, SQL, Agile, C++) - London

£30000 - £40000 per annum + Benefits + Bonus: Harrington Starr: Graduate C# De...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?