SENIOR European and British bankers disagreed yesterday over whether banks in countries opting out of monetary union should have equal access to funds denominated in the new currency, the euro.
In a televised debate, French and German bankers strongly opposed allowing banks based in non EMU (Economic and Monetary Union) countries to tap intraday liquidity in euros provided by central banks.
"The political question is on access to intraday credit for countries which stay out of EMU," Mr Christian Westerhaus, director of payments systems at the German Banking Association, said.
"Here my assessment would be to say that countries within EMU should get access to intraday liquidity of the central banks but for countries which stay out, refinancing should be made on the market."
The debate was televised shortly after the European Monetary Institute (EMI) said central banks across the European Union would have access to a sophisticated cross border payment system from 1999, regardless of whether they were in or out of EMU.
Many British bankers fear that London will lose its status as Europe's main financial centre if it cannot compete for money market business in the euro on equal terms with European banks.
Mr Eric Sepkes, vice president of Citibank in London and deputy chairman of the Ecu Banking Association in London, said there was a clear risk to London's position, but the issue hinged on banking relationships.
"It always harder to get back a relationship then to retain it in the first place, so I think the condition of access is critical if you believe Britain will join at some time in the future," Mr Sepkes said.
Mr Edouard De Lenequesaing, executive vice president of Credit Commerciale de France in Paris, said a distinction should be made between countries which wanted to join EMU but were unable to do so immediately, and those which chose to stay out.
Mr Roger Brown, coordinator of EMU issues at the British Banking Association, noted that the EMI report had promised that conditions for use of a euro settlements system would be "as equal as possible" for institutions in and outside EMU.
