The 1999 introduction of a single currency in the European Union will not have a destabilizing effect on international currency markets, according to a senior EU official on monetary issues.Herve Carre, director for monetary matters at the European Commission’s Directorate General for Economic and Financial Affairs, visited Tokyo this week to brief Japanese authorities and the private sector about the legal aspects of the planned launch of the euro. In an interview, Carre stressed that monetary integration of the EU is going as scheduled and that there is strong political will to achieve the plan among member states. “The deal is done, and European Monetary Union will begin (as planned) in January 1999,” he declared.Carre brushed aside concerns over the effect the new currency might have on foreign exchange markets and said a stable euro, dollar and yen would benefit the international community. “Markets will assess (these currencies) vis-a-vis the policies implemented (in each country),” he said, adding that while the yen’s role in that new order would depend on Japan’s policies, he did not expect policymakers to not be able to manage the currency’s new role. “We don’t know whether the euro will be weak or strong — exchange rates are a relative price. What we want is a stable currency and currency management that allows price stability,” he said.Under the current timetable, member states participating in the introduction of the euro will be chosen early next year, at which time the European Central Bank would also be set up. Observers predict that roughly six or seven members, including France and Germany, will participate from the outset.
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