Mr Anthony Loehnis, an Executive Director of the Bank, discusses the scope for progress towards monetary union in the European Community and the difficulties that lie in its path, addressing in particular the questions of when such union might be possible, how it might be achieved and the choice of a future common currency. He argues that monetary union will be the culmination of a gradual progression towards greater convergence in economic policy and performance, in which completion of the internal market will be an important step, and that premature moves toward monetary union could jeopardise the progress being made towards the internal market. Achievement of a common currency, too, will not be feasible until much greater economic convergence has been achieved: and efforts to force the pace, by pressing for development of the ECU as the European currency and concentration on institutional changes, would be both difficult and potentially harmful in diverting attention from the essential pre-conditions. The private ECU should be allowed to develop in accordance with the needs of commercial markets.
European currency and European central bank-a British view