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Technical tinkering 'inadequate' for ERM

Andrew Marshall
Thursday 25 February 1993 00:02 GMT
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BRUSSELS - The European exchange rate mechanism needs more than just technical reform, Henning Christophersen, the EC economic commissioner, said yesterday, writes Andrew Marshall.

The comments, made to a committee of the European Parliament, indicate that criticisms levelled at the ERM by Britain and Ireland have had some effect.

A report on the functioning of the European Monetary System is being drawn up by the Community's secretive Monetary Committee for release in May. It contains mainly technical changes, tightening existing rules on intervention for instance, according to officials.

But Mr Christophersen said yesterday: 'I don't think we can rely simply on technically improving the system.'

Several officials indicated yesterday that the report would be something of a damp squib and was unlikely to deliver the kind of changes that John Major foresaw when he talked about 'fault lines' in the EMS after the pound left the exchange rate mechanism last year.

Not all the reforms discussed by Mr Christophersen would be to the Government's liking. He said member states should negotiate their central rates with other countries when they enter the system - an implicit criticism of Britain's high entry level for sterling. But he does favour more frequent realignments.

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