German Bankers See Amicable End To Bonn-Buba Spat

Top German bankers on Tuesday predicted an amicable end to the tussle between Bonn and the Bundesbank over plans to revalue gold and currency reserves and downplayed the importance of hitting Maastricht targets dead centre.

"I am pretty sure the government is not interested in hurting the reputation of the Bundesbank or the other way around," Martin Kohlhaussen, chief executive of third-largest bank Commerzbank said.

Bayerische Vereinsbank chief executive Albrecht Schmidt said the split between the government and the German central bank was unnecessary, since it made no sense for Bonn to try to meet precise Maastricht Treaty criteria at any cost. Like other bankers, he said Europe's Economic and Monetary Union (Emu) was still fully on track and praised EU countries' progress in reining in their debt and deficits for the euro.

 

"We are looking at the frame, not at the picture and the picture is one of a converging Europe," Schmidt said. "We in the industry know that three per cent is not necessarily 3.0 percent," he added.

Maastricht demands that countries taking part in the euro launch reduce their deficits to three per cent of gross domestic product--a key sticking point for Germany. Bonn's asset revaluation plan, with proceeds to be used to retire old debt this year and next, is seen as boosting German chances of meeting monetary union criteria this year.

The Bundesbank has dismissed the plan as an assault on its autonomy and on the country's credibility as a euro hardliner, and has recommended that the revaluation not take place until 1999, or until Emu participants are chosen in 1998 at the earliest.

Bankers conceded that the timing of the government's plan was unfortunate but said agreement would be reached. German finance minister Theo Waigel and Bundesbank president Hans Tietmeyer expressed optimism that a compromise could be reached after talks in Bonn on Tuesday.

The bankers were speaking on the fringes of the International Monetary Conference in Interlaken, Switzerland, where Chancellor Helmut Kohl on Monday defended the gold revaluation plan.