90/06/23
18:37
BRITISH EMBASSY TOKYO
to the point of decision on what economic and monetary union
actually means. When one considers the importance of this issue
it is not surprising that there should be a lively debate both
within countries and between countries.
Stage one of economic and monetary union has already begun. It
will involve the construction of a single Community financial
area with a single market in financial services and it will allow
free movement of capital. All member states will become full
participants in the exchange rate mechanism of the EMS. That
will include the UK, when our conditions are met. Stage one will
already represent major progress towards economic and monetary
union and we in Britain like our partners, are fully committed
to it.
The question has been what will follow stage one. I am glad that
the Community has begun to look in a serious and practical
fashion at this question. Should we try to impose by political
decision an automatic transition to a single currency, a single
monetary policy and a European central bank? Or should we take
a more evolutionary approach so that monetary union comes about
as economic preferences between member states converges? The
British Government is not alone in having doubts about the
feasibility of the former approach. That is why we
we have put
forward some serious ideas to show how the second approach might
be implemented. They involve the creation of a hard Ecu which
would be a new undevaluable EC currency. It would co-exist
beside the existing currencies of the 12 member states. To
that
we propose
implement we propose the establishment of a European monetary