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To: goldsnow who wrote (9326)	4/4/1998 2:14:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116762

German parliamentarians seek assurances on EMU 05:26 a.m. Apr 03, 1998 Eastern By Douglas Busvine BONN, April 3 (Reuters) - Bonn politicians pressed Bundesbank President Hans Tietmeyer and European Commissioner Yves-Thibault de Silguy on the viability of European monetary union on Friday, seeking assurances the euro would not hurt the German economy. Addressing a joint session of the finance and social affairs committees of Germany's lower house of parliament, the two faced several rounds of questions on which nations should join the monetary union and how the euro would affect inflation and interest rates. Tietmeyer painted a sober assessment of life under the euro, warning that the single currency project will face tough tests. De Silguy, trying to reassure parliamentarians, promised that the European Commission would take action needed to ensure a stable euro and, looking ahead, suggested that the next step was to bring European tax levels into line with one another. Stressing the positive, he said he fully stood by a Commission report published last week which recommended that EMU kick off in 1999 with 11 member countries. Tietmeyer, noting that EU inflation was now at a ''pleasingly low level,'' warned however that some nations had only short histories of economic stability and that it was yet to be seen if price stability could be achieved during periods of faster economic growth. ''A culture of stability cannot be seen as secured,'' Tietmeyer said. Noting that neither the Bundesbank's nor the European Monetary Institute's (EMI) reports on convergence for monetary union had contained a recommendation for which countries should take part, he declined to make such a assessment. The doubts expressed in the Bundesbank and EMI reports ''were expressly on the basis of the assessment of convergence .... and do not refer to the membership (of EMU),'' Tietmeyer said. The Bundesbank report had concluded that EMU was ''justifiable from a stability perspective,'' he noted. Pressed again to make clear whether he would back an 11-member EMU, he said only that the Bundesbank report offered an ''implicit comment'' on how many should be in EMU. He went on to say that the EMI had shown Belgium and Italy how to get their finances in order for monetary union. Both countries' debt in 1997 was some 120 percent of national output, twice the Maastricht treaty's recommended ceiling. ''Significant budget surpluses must be achieved,'' he said. De Silguy offered a more upbeat assessment, promising that the European Commission would make sure that participants in monetary union lived up to their budgetary commitments. One-off budgetary measures, which were used in several EU nations in 1997, would have to be made sustainable, he said. ''We will monitor the situation very carefully to make sure that one-off measures will become sustainable.'' ''As guardians of the treaty the commission will make sure that these (budgetary) commitments are abided by.'' The next focus for the EU after economic and monetary union (EMU) would be tax harmonisation, he said. ''I think we are looking at harmonisation. This is necessary, otherwise there will be tax losses in some states.'' Speaking about Belgium and Italy, the EU Commissioner said there was reason to believe that both nations were making good progress in reducing debts. He added that the commission had strictly checked the economic conditions in the candidate nations, and that all other convergence criteria would be fulfilled by the 11 selected to launch European monetary union. ((Frankfurt Newsroom, +49 69 756525, frankfurt.newsroom+reuters.com)) REUTERS