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Tuesday, 5 December, 2000, 15:08 GMT
Bundesbank's euro expansion fears
Bundesbank - head office
The Bundesbank is insisting the criteria for euro membership
by the BBC's Patrick Bartlett from Frankfurt

Germany's central bank, the Bundesbank, has called for tougher entry requirements for Eastern European countries seeking to join the euro.

In a letter to the foreign and finance ministries in Berlin, it warned that "significant problems" could result if countries now applying to enter the EU were allowed to join the eurozone too soon.

The intervention, the initiative of the Bank's President, Ernst Welteke, comes just days before a crucially important EU summit to prepare for European enlargement.

The Bundesbank's letter reflects fears - widely held in German business circles - that an already weak euro could be undermined by enlargement.

Euro fears

This would be the case, they believe, if the financial markets think EU newcomers will be given quick access to the euro.

Hans Eichel, German Finance Minster
Hans Eichel, Long wait for new members.

Several of the candidate countries, such as Poland and the Czech Republic, could be members of the European Union by 2003.

In theory they could join the euro just two years later if they met the targets laid down in the Maastricht Treaty on the single currency.

But the Bundesbank is insisting the Maastricht criteria for euro membership - including budget and inflation targets - are not sufficient for countries in central and eastern Europe with rapidly developing economies.

Economic convergence needed

In its letter, it says they should be tested for real economic convergence, though it doesn't spell out what that means.

The letter is bound to fuel resentment in EU candidate countries, who feel they're not being treated in the same way as existing members.

But there's no doubt many in German business and banking circles share the Bundesbank's reservations.

As if acknowledging their concern, the German Finance Minster, Hans Eichel, said at the weekend it would take years after EU accession before new members could join the euro.

But the eurozone is regarded by most applicants as the EU's elite club.

After the squabbles over enlargement, it seems yet further battles lie ahead over the euro.

Click below for background and analysis on Europe's single currency

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