In a speech to European parliamentarians, the Governor argues the case for a gradualist approach to European monetary union, pointing up some of the essential characteristics and consequences of full union - particularly for interest rates and exchange rates - and warning of the problems that could arise should the Community press ahead to full monetary union before a much greater degree of economic convergence has been achieved.
The Governor then goes on to explain the United Kingdom's proposals for measures that might form the basis of the next stage of the process towards monetary union - the establishment of a European Monetary Fund and the issue of a new common currency, the Hard Ecu. These proposals, he argues, would offer an evolutionary, market-based approach to greater monetary integration; would avoid jeopardising the ultimate goal of monetary union by pressing for it prematurely; and would be a way forward beyond Stage 1 for all Community members.
The United Kingdom's proposals for economic and monetary union