Bankers move to scotch rumours of EMU delay

THE heads of the Bundesbank, the Dutch central bank and the European Monetary Institute have joined forces to try to kill rumours of a delay of Economic and Monetary Union (EMU), which have upset the markets for a few days.

Calling the rumours ridiculous or unfounded, Bundesbank president Dr Hans Tietmeyer, Dutch central bank chief, Mr Wim Duisenberg and European Monetary Institute (EMI) head, Mr Alexandre Lamfalussy, produced some exceptionally clear language on the occasion of the award of the 1996 European banker of the year prize to Mr Duisenberg.

"Fears and rumours on markets of a delay in economic and monetary union are so ridiculous that I can't understand them," Dr Tietmeyer said, adding that such rumours are "divorced from reality". Sources in Ireland have also said the rumours have no foundation.

European bond and stock markets suffered on Friday from a rumour that the German government was getting ready to request a postponement of monetary union.

"Market rumours of a delay in EMU are unfounded," Mr Lamfalussy said, and he was backed by Mr Duisenburg who stressed during his acknowledgment speech that "EMU will start on January 1st, 1999.

"The launch of the single currency has become a certainty I repeat, a certainty."

Mr Duisenberg is to succeed Mr Lamfalussy as EMI head next July 1st.

The three men's sharp reaction shows their determination to keep their fingers in the dyke to try to ward off any sign of turbulence on financial markets.

Such developments might well make the planned shift from national currencies to the single currency, the euro, more difficult.

At the same time, it highlights their concern frequently mentioned in speeches by Bundesbank members to try to keep the period of uncertainty preceding the choice of the initial members of the single currency from possibly spoiling the launch.

Members of the first group of European Union countries to take part in the euro are to be chosen early next year on the basis of 1997 economic performance.

Mr Duisenberg also touched on the controversial issue of the division between EU members taking part in 1999 and those ruled out for the launch.

The southern European countries have been reacting sharply and publicly against those who would like to leave them out of EMU.

He said. "At present, numerous (EU) countries are making intense efforts to meet the Maastricht Treaty convergence criteria for launching the euro. But we have to accent the idea that some of them will be unable to take part in the euro start up on January 1st, 1999.

"If they manage to meet the criteria in the near future (after the launch), some of them will be able to join the hard core when the euro banknotes and coins are introduced in 2002."

Dr Tietmeyer refused to speculate on which countries would take part in the first group. "It is in the interest of the countries wanting to join in monetary union to meet the economic convergence criteria," he said.