Comment: The good ship EMU holed below the waterline

European finance ministers meeting in Valencia this weekend are ostensibly discussing a name for the new Euro-currency and practical details about how to manage the transition to it from the initial fixing of exchange rates and establishment of a European central bank on 1 January, 1999. They might just as well be rearranging deckchairs on the Titanic.

The reality is that a Europe-wide move to monetary union in 1999 now looks holed below the waterline. Despite Helmut Kohl's protestations, key interests within Germany have served notice that they will not be party to a cooked deal on the Maastricht convergence criteria that would include debt-laden and inflation-prone countries like Italy. Of those interests, none packs a bigger punch than the Bundesbank. Officially of course, the bank endorses the move to monetary union. Few doubt, however, that it is reluctant to conspire in its own demise.

As everyone knows, central bankers not only like to remove the punchbowl just as the party gets going, but they are also generally tight-lipped. Not so with the talkative bunch on the Bundesbank council in the past week. Scarcely a day has passed, it seems, without some further hardening in the bank's position on monetary union.

At the beginning of the week it was the turn of its president, Hans Tietmeyer, to insist that political compromises could endanger stability, that codeword for fiscal and monetary responsibility. At the end of the week, it was the turn of Gerd Hausler, a member of the bank's Frankfurt directorate, to raise the ante on sanctions against budget deficits after monetary union.

The Bundesbank does not always get its own way. Helmut Kohl rode roughshod over its opposition to his proposed terms of German monetary union. But it is on surer ground with European monetary union. Despite the common front of party political support and the backing of big banks and large companies for the project, the German public is not convinced: more than two-thirds are opposed to the plan to kill the mark.

On the current timetable, the decision on which countries will qualify for EMU will be taken either at the end of 1997 or in 1998. One factor to bear in mind is that the Bundesbank will be throwing a party - and providing the punchbowl - on 21 June, 1998 to celebrate the 50th anniversary of the mark. This is just ahead of the federal elections in October. It will be quite an occasion; the mark has come to be the totem of German economic regeneration since the War. Given the events of the past few days, that party doesn't look like turning into a wake.