Paris dealt a second blow over euro

Date: 10/07/1997

By Tim Jones

MONETARY officials have rejected the pro-growth agenda launched by France at last month's Amsterdam summit.

Having established the supremacy of the European Central Bank's commitment to fighting inflation when the euro's exchange rate is set, they are now making it clear that there will be no powerful political counterweight to the bank.

In Amsterdam, prime ministers agreed to a French demand to look into the relative powers of the ECB and governments when it came to foreign exchange policy and economic policy coordination.

But senior officials say the parallel inquiries will show that the independence of the ECB in all aspects of monetary policy is watertight.

“There is no way that they can slip extra ministerial powers through by the back door,” said one.

This will come as welcome news to the German government, which needs the ECB to be as independent as the Bundesbank if it is to sell the euro to a reluctant public.