The Bundesbank may take a critical tone when it briefs Bonn on Europe's readiness for monetary union in March, but has neither the will nor the power to disrupt the euro project, economists say.
Despite the occasional outburst from eurosceptics on its policymaking council, economists say the German central bank still firmly wants to see monetary union happen.
In any case, the political momentum that is pushing for a euro launch as scheduled on January 1st, 1999, will be almost impossible to brake at this late stage.
"The Bundesbank is not going to blow up monetary union, nor will it unequivocally condemn Italy as a candidate," said Mr Allan Saunderson, chief economic analyst at Frankfurt Money Strategist and a seasoned Bundesbank watcher.
"One has to realise that central bankers are losing ground in the Maastricht debate and that includes the Bundesbank."
Confirmation came on Thursday that Bonn wants a Bundesbank report on EMU, amid ongoing debate as to whether Italy's high debt and history of political instability should make it ineligible to take part in the euro launch. Dr Helmut Kohl, the German Chancellor, has asked the Bundesbank president, Mr Hans Tietmeyer, to attend a German cabinet meeting on March 27th to report on convergence developments - more than a month ahead of the final decision in May on who has made the EMU grade.
The accompanying written Bundesbank report, which Dr Kohl has said would preferably be available by March 27th, will be crucial for German public opinion, which remains decidedly sceptical on economic and monetary union (EMU).
More dangerously, a clear condemnation from the Bundesbank - which remains one of Europe's strongest voices on monetary issues - could thwart Italy's ambitions to take part in the euro launch.
"I expect there may be a few critical remarks on Italy's debt position but this will not be an open recommendation to take action," said Mr Jan Hatzius, economist at Goldman Sachs, Frankfurt.
"The vast majority of the Bundesbank council is fully committed to the euro and is behind Bonn on the timing," Mr Hatzius noted.
