Single currency agenda criticised

Date: 26/10/1995

By Fiona McHugh

EURO MPs this week told member states that the three-step plan for moving to a single European currency agreed by their finance ministers in Valencia last month is not ambitious enough.

The draft schedule carefully crafted by ministers and central bank governors three weeks ago won little praise from MEPs, who criticised it as far too gradual in a resolution adopted in Strasbourg yesterday (25 October).

The plan agreed in Valencia provided for a gradual introduction of the yet-to-be-named currency, starting with an agreement on participants in January 1998 to be followed by a fixing of exchange rates one year later. Banknotes and coins would be issued in 2002 and national currencies phased out over the following six months.

But MEPs want the single currency to be made legal tender as soon as exchange rates are fixed in 1999 and insist that all financial institutions should do their inter-bank business in the new currency from the same date. Under the ministers' plan, commercial banks would remain free to choose which currency to trade in until 2002.

Banknotes, the Parliament said, should come into general use in 2001 and the adjustment period to allow citizens to come to terms with the new money should be cut back from six months to a few weeks.

In December, government leaders are due to decide on the relationship between the 'inner core' of countries participating in economic and monetary union and the 'outer core' of those remaining outside. The Parliament says that this must be done through the Exchange Rate Mechanism, allowing the single currency to 'anchor' those currencies which remain outside the EMU zone.

The resolution says “a brisk, decisive and constructive stance” must be adopted to dispel the uncertainty surrounding EMU.

Predictably, it calls on member states to hurry up and fulfil convergence criteria on debt, inflation, interest rates and deficits laid down in the Maastricht Treaty. It also urges the Commission to launch a public relations campaign to win citizens over to the project.