EC MINISTERS WILL DISCUSS STRENGTHENING EMS FLOAT
European Community finance ministers
and central bankers meet in Belgium this weekend to discuss
strengthening Europe's joint currency float amid continuing
worries about turbulence on foreign exchanges.
    Belgian Finance Minister Mark Eyskens, who will host the
informal talks, told Reuters the ministers and central bank
chiefs would discuss the situation on currency markets in the
light of the February agreement among leading industrialised
countries to stabilise exchange rates around present levels.
    In an interview, Eyskens said he felt the Paris accord
between the United States, Japan, West Germany, France, Britain
and Canada had proved itself "more or less workable."
    But doubts over its effectiveness and durability have been
growing since fears of a trade war between the United States
and Japan over computer microchips pushed the dollar to a
record low against the surging yen early this week.
    The talks, at the Belgian resort of Knokke, are being held
to coordinate the EC's positions on monetary issues and Third
World debt ahead of the Spring meetings of the International
Monetary Fund and World Bank in Washington next week.
    The EC gathering begins tonight with a dinner but the main
discussions will take place tomorrow.
    Continued international currency turbulence could undermine
plans for reinforcing the European Monetary System, the joint
float holding eight EC currencies within narrow fluctuation
bands, which will feature high on the weekend agenda.
    Eyskens has repeatedly said that Europe needs a period of
calm on world currency markets, and in particular a more stable
dollar, before it can set about strengthening the EMS to make
it more resilient against exchange rate swings.
    The EMS has been taking a battering over the last year as
the falling dollar has sent funds surging into the dominant EMS
currency, the West German mark, forcing ministers to undertake
two major realignments of parities within nine months.
    In the interview, Eyskens made clear he was hoping for a
wide-ranging discussion on the future of the eight-year-old EMS
on the basis of proposals for bolstering it drawn up by the
EC's Monetary Committee and the Committee of Central Bank
Governors.
    The committees were asked to come up with the proposals
after the last reshuffle of EMS exchange rates in January.
    Eyskens repeated calls for the European Currency Unit, the
fledgling EC currency at the core of the system, to take over
the mark's dominant role in the EMS - a proposal that has met
with a cool response in West Germany.
    He said EC Commission President Jacques Delors would report
to the meeting on problems raised by plans to liberalise
capital movements fully within the 12-nation bloc by 1992, such
as the need for harmonising taxes and banking controls.
    Eyskens said liberalisation of capital movements without
strengthening the EMS would be an element of destabilisation in
the Community. 
    He said the crucial issue in the debate was whether member
states were willing to push further towards the EC's goal of
monetary integration on the basis of an EMS that included
management of exchange rates by some kind of common
institution, instead of by national central banks as at
present.
    Plans for the creation of such an institution, foreseen by
the EMS's founding fathers, have been thwarted by the
reluctance of some countries, notably West Germany, to gove up
their sovereignty in the monetary field.
    EMS development has also been held up by Britain's refusal
so far to join the system's core exchange rate mechanism.
 REUTER
