Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Banker calls for early UK entry to EMU

Paul Wallace Economics Editor
Saturday 18 November 1995 00:02 GMT
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

PAUL WALLACE

Economics Editor

Britain should be in from the start if Germany and France go ahead with European monetary union, Lord Alexander, chairman of NatWest Group, said yesterday.

Speaking in Frankfurt, Lord Alexander made the strongest call yet from the head of a clearing bank for UK participation in EMU, but said, however that he was not optimistic. "While I am sure that the UK will be able to meet the convergence criteria, I have doubts that the current timetable will leave room for the political processes of consent."

Lord Alexander warned that if Britain stayed out of a monetary union, "our trade in money and bond markets could be threatened if the European entral bank develops central trading from Frankfurt".

Graham Bishop, an expert on European monetary union at Salomon Brothers investment bank, said the fear was well-founded. "The dangers are that multinationals will centralise Treasury operations in the single currency and do that with institutions which can offer that service."

British banks could offer that facility to clients, he said, but would be less competitive by virtue of having to operate in two books.

Lord Alexander also expressed the worry that British banks could find themselves handicapped in the single market if the UK stayed outside EMU. "I would indeed be concerned if in any sense the banking single market began through practice or design to become restricted to the same area as a narrow EMU zone."

In private, top City bankers are worried about the possibility that members of EMU would make life exceedingly uncomfortable for the City, particularly through influencing financial services directives.

Lord Alexander also spelt out another fear in the City, that British banks could lose out to German and French rivals as retail banking moves from a national to a European scale. "With EMU, the retail banks which are currently national in their markets will become regional." This could lead to the emergence of "super regionals" focusing on economies of scale.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in