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Britain Rejects European Bank, Single Currency

June 26, 1989|From Associated Press

MADRID — Britain today rejected plans to create a single European currency and a central bank but pledged to accept some elements of a plan to form a united European market by late 1992.

West Germany, however, urged the leaders of the 12-nation European Economic Community to endorse the single currency and central bank.

Under a plan being considered at an EEC summit in Madrid, member states would gradually hand over economic policy-making power to the EEC. Surrendering aspects of national sovereignty is a key issue as the community heads toward dropping all trade barriers and creating the single market in 1992.

"Decisions on these matters are simply not on the current agenda," British officials quoted Prime Minister Margaret Thatcher as telling the closed-door summit meeting. "We must stick to the practical and go for what needs to be done now."

The leaders adjourned for lunch on the first day of the two-day summit with aides seeking to draw up a compromise position.

West German Chancellor Helmut Kohl pressed the leaders to accept the plan in its entirety, his spokesman, Hans Klein, said.

As part of endorsing the first stage of the plan, which would begin in July, 1990, Thatcher pledged to link the pound to the other major EEC currencies by joining the exchange rate mechanism of the European Monetary System.

But a British spokesman, who requested anonymity, said Thatcher said Britain will join the European Monetary system if Britain's 8.3% inflation rate is "reduced significantly," if other EEC countries abolish exchange controls by July, 1990, and if the community allows an open market in banking and financial services.

Thatcher argued that earlier membership in the currency alignment by Britain could have shaken the entire system. Britain is the only major oil producer in the EEC, and the pound is boosted by oil price increases, which tend to depress the other currencies.

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