Hans Tietmeyher wants a "higher degree" of political co-operation

Eleven of the 15 members of the European Union will merge their currencies on 1 January 1999, forming a close Economic and Monetary Union (EMU).

Mr Tietmeyer, one of Europe's most influential central bankers, now says that EMU has to be accompanied by a "high degree of political unity at a European level". Speaking on German radio he warned that "if everyone goes their separate ways, that could lead to conflicts with what will be a supranational monetary policy."

He warned that the launch of the euro would intensify the competition between the economies in the eurozone. Until recently, countries with high unemployment were able to increase their competitiveness through currency devaluation. EMU will make that impossible. Mr Tietmeyer's conclusion is that high unemployment can only be tackled through closer political co-operation.

However, the Bundesbank's president believes that monetary union is more likely to create new jobs. He predicted that if the 11 countries in Euroland could live up to the new competition, it could very well lead to additional investment, more dynamism and more jobs.