A SENIOR German banker has called for a "clear word soon" on which countries are likely to join monetary union.
The Dresdner Bank executive said he was concerned that financial markets were unsettled by the debate about whether Italy and Spain would be among the first participants of monetary union.
"This [discussion] is something which has to be ended very soon, otherwise, the markets will be in very high uncertainty through 1997, which could lead to difficulties," Mr Ernst Moritz Lipp said.
Mr Lipp said "a clear word soon" that only a small block of countries was entering EMU would give financial markets certainty.
Speaking at the annual World Economic Forum in Davos, Switzerland Mr Lipp said he did not think Italy and Spain would be able to join monetary union at the scheduled start date on January 1st, 1999.
His comments follow remarks over the weekend by other German bankers who held out the prospect of turmoil on financial markets if countries like Italy joined from the start.
Ordinary Germans fear Italy would import instability into a single European currency if it took part in monetary union, according to Mr Horst Siebert, an economic adviser to the German government. The bankers said market confidence in euro stability could only be won if EMU was at first limited to countries with hard currencies.
Mr Lipp said: "The most probable scenario is that it will be Germany, France and smaller countries like the Benelux and Austria. But I am very worried about the actual discussion."
The German Chancellor, Dr Helmut Kohl, last week rejected the idea that Bonn was fundamentally opposed to Spain's EMU membership.
The German finance ministry number two, Mr Juergen Stark, made it clear yesterday that Bonn was worried some countries did not have the track record to show they could maintain economic stability after joining EMU.
He did not name any countries, but there was little doubt he meant southern European EU members like Spain and Italy when he said some countries which qualify on paper "would be well advised to" maintain exchange rate flexibility for a certain period".
