Asian turmoil overshadows EMU debate

The turmoil in the Asian markets last week and the elections in South Korea overshadowed the debate over European economic and monetary union (EMU). "There has not been anything this week to make change. Asia has been by far the biggest story," said Gunter Tumin of Salomon Brothers.

According to Alison Cottrell of Paine Webber, it is increasingly unlikely that any of the main governments in Europe will pull a big surprise between now and May next year when the Council of Ministers approves the list of countries taking part in EMU in 1999.

"As we move towards the end of the phase, the pressure on the heads of state not cause a shock is greater, in terms of both their future standing and also in terms of the reaction," she said. It would be much harder for any of the countries which the markets expect to join up to pull out without a huge negative impact on their currency.

Julian Jessop of Nikko Europe said that as most people assumed EMU would go ahead on time, the issue was where the interest rate would be set by the European Central Bank.

The European Union is nearing a possible compromise on who will be the future ECB president, EU monetary officials said yesterday.

Officials said there appeared to be greater optimism that differences between France and the Netherlands, the two main protagonists, can be resolved.