Buba Seeks To Limit Access To Target

Johann Wilhelm Gaddum, Bundesbank deputy president, named no countries, but his comments are bound to exacerbate the conflict between likely Emu members, such as Germany and France, which oppose unrestricted access to Target for non-members, and countries initially likely to stay out, such as the UK and Denmark.

In the German central bank's first public comment on the issue, Gaddum said the argument that non-members of Emu should have access to the credit facilities of the future European central bank "contradicts the sovereignty of a currency zone which prevails and is recognised around the world".

In a speech on German capital markets, he added: "There is no country in the world in which non-members of a currency area have a right to participate in the money creation of a foreign currency area." Eddie George, governor of the Bank of England, warned this month that the Target dispute could undermine co-operation between European central banks and create an unnecessary split between Emu members and non-members.

 

The Bank of England refused to comment yesterday. However, Tim Sweeney, director-general of the British Bankers' Association, said: "We see Target fundamentally as a single-market mechanism and therefore we do not see any reason why there should be any discrimination for those outside [the euro area]."

Germany and France want strict conditions attached to access to intra-day liquidity in the planned euro currency to prevent this spilling over into overnight credit.

Central to the dispute is the fact that Target is not just a cross-border payments system but the route through which the European central bank will conduct monetary policy.

Michael Cassidy, chairman of the Corporation of London's policy andde virtual="/incs/bottom.inc"-->