BANK of England governor Mr Eddie George warned yesterday against "premature monetary union" among countries not meeting economic convergence criteria, which he said "would put European prosperity at unnecessary risk".
Speaking to a bankers' meeting in Amsterdam, he said that if the members of future monetary union were not "genuinely and sustainably convergent" in economic terms, that would endanger European prosperity pointlessly. He again expressed skepticism about the advantages of the European Union's planned single currency, to be inaugurated at the start of 1999, and said that the only acceptable argument for it was the certainty it would offer with respect to exchange rates, but he doubted that such a factor was essential.
As to current British monetary policy, he reaffirmed the central bank's stand in favour of a moderate rise in interest rates. The Bank of England chief stressed the risks involved in monetary union, saying that in future European countries might have "divergent monetary policy needs within the euro area", depending on the political or economic situation.
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