THE German government and the Bundesbank sought yesterday to play down their differences over the planned single European currency following a report that the central hank's president, Mr Hans Tietmeyer, favoured postponing the launch of the euro.
The Bundesbank denied Mr Tietmeyer had made any such comment and insisted that he remained committed to both the timetable and the entry criteria for Economic and Monetary Union (EMU).
According to the report, to be published in the news magazine Der Spiegel today, Mr Tietmeyer favours delaying the start of EMU if France and Germany fail to meet the economic criteria set out in the Maastricht Treaty.
"Wouldn't it be a possibility, together with France, to agree to a delay in the start of the euro?", he is quoted as asking.
Finance Minister, Mr Theo Waigel, immediately dismissed the suggestion, adding that the merest hint of a delay served to unsettle financial markets.
Relations between the government and the Bundesbank nosedived last week when the bank rejected Bonn's scheme to meet the Maastricht criteria by revaluing Germany's gold reserves and transferring DM10 billion in profits to the government this year.
The central bank accused the government of interfering in the Bundesbank's independence and endangering the credibility and stability of the new currency. In a statement to the Reuters news agency yesterday, Mr Tietmeyer said the central bank council in its statement on May 28th last had "merely pointed out a few problems that were involved in the legally prescribed payout of balance sheet amounts that would result from a revaluation of gold and currency reserves".
He said its objections concerned above all any additional payout in 1997. "The Bundesbank hopes that the German government and parliament will take appropriate consideration of these objections when they make their decisions, his statement said.
The row has highlighted the extraordinary status the central bank enjoys in Germany. The bank is legally independent of the government the federal states and private interest groups and has more autonomy than any of its European counterparts and even thank the Federal Reserve Bank in the United States.
This power and independence reflect the profound terror of inflation felt by most Germans, a consequence of the disastrous inflations that followed both world wars and wiped out the savings of millions of citizens. Determined to keep monetary policy out of the hands of politicians, West Germany's postwar leaders ensured that the Bundesbank remained free of parliamentary supervision.
According to its 1957 constitution, the bank must support the government's economic policy - but only insofar as this policy does not conflict with the primary responsibility of the Bundesbank - the safeguarding of the currency.
The bank has been fiercely independent in defence of the deutschmark, which has an almost totemic position in the German popular imagination.
There is little doubt that the Bundesbank, in common with most Germans, would prefer to abandon EMU than to replace the mark with a weaker currency. Mr Tietmeyer is particularly concerned that the new European Central Bank (ECB) should have the same independence from political interference as the Bundesbank enjoys.
Bonn tears that yesterday's election may stiffen France's resolve to appoint a politically malleable French candidate as the first president of the ECB. The German government and the Bundesbank agree that such a development would spell the end of their dream of a euro as strong as the mark.
