The euro is set to become an important reserve currency, Mr Wim Duisenberg, the president of the European Central Bank (ECB) said last night.

According to Mr Duisenberg, the euro will join the dollar and yen rather than replace either of them as some countries begin pegging their own currencies to the euro. He added that the currency world would become "tri-polar" as Japan overcame the difficulties it was currently facing.

But the ECB president also insisted that it would be taking a neutral stance on the international development of the euro. "We will neither encourage it nor hinder its development, as maintaining price stability in the euro zone is our prime objective."

The ECB is likely to be keen that any move to use the euro as a reserve currency happens gradually as too fast a move could force its value up against the dollar too rapidly for European exporters' comfort.

At the end of 1997, the dollar accounted for 57.1 per cent of the world's foreign currency reserves, while European currencies now in the euro zone accounted for just 19.4 per cent, according to International Monetary Fund figures.

Mr Duisenberg also insisted that individual central banks could not release the substantial reserves they are holding, except under the guidelines of the ECB.

The billions of euros held in central banks across the euro zone are tempting for many governments who would like to get hold of the cash to either reduce their debt levels or indeed spend on various projects.

The ECB has its own reserve and is not thought likely to need to draw on the various national central banks.