The ECU: rapid growth.
But if these goals are to be attained, the obstacles
which confront European industry in other areas
will have to be removed. First and foremost, a
truly common market must be created which
affords European commerce and industry a
domestic market of 320 million consumers,
including the new members, Spain and Portugal.
Some encouragement can be drawn from the
fact that, in December, the European Council
supported proposals by the Commission which
are intended to produce a single internal market
by 1992. It is to be hoped that these proposals,
adopted by the Council in order to speed up and
simplify the decision-making process, will
indeed be put into practice. If not, and bearing in
mind the experience of past years and the fact
that there are now two more member states, it
must be feared that the arrival of a single,
integrated market will be delayed for many
years. Such a situation could conceivably lead
to a "two-speed Europe".
If a smoothly functioning, common market is
to become a reality, the role of the European
Monetary System must be strengthened. Recent
experience has shown how important the EMS
can be. Both the increasing convergence of the
economic policies of the participating countries
and the resultant relative stability of their
exchange rate parities can certainly be ascribed
in part to the existence of the system. There is
thus every reason to press ahead with measures
which could assist its development.
For some time now, the most important issues
have been Britain's accession to the system and
the lifting of capital market restrictions in a
number of EMS countries including Ireland,
France and Italy.
In principle, one could advocate that the other
countries which, like the UK, are members of
the European Community but have not yet
joined the exchange rate mechanism of the EMS
should be invited to do so. It must, however, be
borne in mind that they are probably unable or
unwilling as yet to display the necessary
discipline. It is better that these countries -
Greece, Portugal and Spain - should wait a
while and then join a strong and stable EMS
than that the position of the EMS should
be eroded by frequent, but necessary realign
ments.
The stability of the European Monetary System
was among the factors which led to the ECU
making greater than anticipated progress in the
private sector in 1985. This is especially true of
the use of the ECU in financial traffic. Not only
do more than 700 banks now operate in the
interbank ECU market, but in 1985 this
currency occupied fifth place in the Eurocapital
market in terms of issue volume. It would
appear that the relative stability of the ECU, in
comparison with the currencies of the individual
member countries of the EMS, and the
comparatively stable interest rate have made the
ECU attractive to borrowers and lenders alike.
While still modest, the commercial use of the
ECU in international trade, e.g. in invoicing, is
increasing all the time.
The growth in 1985 of the private use of the
ECU justifies the conclusion that, in the years
ahead, this currency unit can play an important
role in the strengthening of the European
Community. One could, for example, conceive
of the wider use of the ECU in the international
capital market, giving European industry easier
access to the funds available in Europe for
investment.
Furthermore, the establishment of a European
ECU clearing institute, the final decision on
which was taken at the end of 1985, will bring
much greater flexibility in interbank traffic in
ECUs. The ABN will be the only Dutch bank to
participate in the institute. The reduction in
charges made possible by this initiative will also
make it more attractive to employ the ECU for
commercial purposes. For businesses this can in
time lead to lower charges for payments traffic
and currency management, so that their
competitive position is strengthened vis-a-vis
American and Japanese companies, in
particular, which are operating in a large home
market with a single currency. Lastly, for the
public at large, a widening of the range of
applications (which already include ECU travel
ler's cheques and ECU life insurance) will render
the term "Europe" more tangible.
However encouraging these possibilities may
appear, the further growth of the private ECU is
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