Germans in EMU warning

THE BUNDESBANK sharply criticised the European Commission yesterday for encouraging backsliding on the tough convergence criteria governing European monetary union.

Johann Wilhelm Gaddum, the German central bank's vice-president, issued the warning while stressing the Bundesbank was taking the EMU goal very seriously.

'There is not even much to say against the fixed timetable, as foreseen in the Maastricht treaty,' he said. 'Experience shows that the prospects of realising supranational projects in Europe increase the more binding are the agreements.'

Strict adherence to the convergence criteria must, however, be the overriding priority, Mr Gaddum insisted, pointing to unmistakeable tendencies within the commission and some member states to play down, and even interpret away, their excessive state debts.

'This is totally unacceptable,' he said. 'European monetary union must not be allowed to begin under false pretences.' He also said it was wrong for the commission to set the inflation benchmark according to the worst of the top three member states. Rather, the country with the best price stability must set the standard.

'One needs an exemplary standard bearer for a stability policy so that the start of monetary union occurs at the lowest inflation point,' he said.

Mr Gaddum said the Bundesbank was watching with alarm growing attempts within the union to weaken or re-interpret the convergence criteria.