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Monday, 5 June, 2000, 15:36 GMT 16:36 UK
Greece to join euro
Greece has turned around its economy to get ready for the euro
Greece has turned around its economy
Greece has won endorsement from European finance ministers to become a full-fledged members of the single currency.

The meeting was a crucial step for Greece, which now looks set to become the twelfth EU country to join the euro.

Greece's membership was endorsed by the finance ministers, with final approval set for the Portugal summit later in June.

"Greece will become a member for sure. It meets all the requirements for membership," Austrian Finance Minister Karl-Heinz Grasser told reporters.

He added that he hoped the move would put pressure on the remaining EU members who have opted out of the single currency - Denmark, Sweden, and the UK - to reconsider their stance.

The European Commission has recommended that the Greek currency joins the euro in January at a rate of 340.75 drachmas to the euro.

Unlike the three opt-out countries, Greece wanted to join the euro, but did not meet the economic targets necessary until recently.

"Greece has made a huge improvement," said French Finance Minister Laurent Fabius.

Strengthening the euro

Further plans to strengthen the euro were also discussed at the finance ministers' meeting.

France and Germany wanted to strengthen the informal grouping of Eurozone finance ministers so that all countries will speak with a single voice.

But they will now wait until the French assume the Presidency of the EU, on 1 July, before presenting their proposals.

The plan for further co-operation has been given a cautious welcome by some council members of the European Central Bank.

"The more the finance ministers get their act together the better, but in no way does it give them any power over the ECB," said Finnish central bank chief Matti Vanhala.

The idea is to strengthen the euro on international currency markets.

The euro has recovered since it hit a low of 88 cents in May, having plunged around 25% against the dollar since its launch last year. It was trading at more than 94 cents to the US dollar early on Monday.

"The euro still has potential to appreciate," said Luxembourg's Prime Minister Jean-Claude Juncker, who also serves as finance minister.

Tax row deadlock

Meanwhile, finance ministers failed to reach agreement on a proposal to tax the savings of non-residents, despite two years of debate.

The UK had opposed the tax because of fears it could lead to massive job losses in the City and the collapse of the trillion dollar Eurobond market.

Germany had led calls for a 20% tax on the interest earned on non-resident savings accounts, in a bid to clamp down on cross-border tax dodging.

The Portuguese proposed a compromise, where member states could either introduce the tax or exchange information about the income in non-resident accounts with the non-resident's home country.

Eventually, all countries would move to an information exchange system but so far, member states have failed to agree when this should happen.

The UK insisted that such "co-existence" would be strictly limited in time.

But Luxembourg, Belgium and Austria are opposed to any system of information sharing, which could jeopardise their banking secrecy laws and weaken their role as tax havens for other EU citizens.

The deadlock will now be discussed by European heads of state at the Portugal summit.

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See also:

10 Dec 99 | Business
EU tax plan shelved
02 Dec 99 | Business
Q&A: The EU savings tax row
05 Jun 00 | Business
Euro-zone tensions rise
20 Apr 00 | Business
Greece's euro gamble
09 Mar 00 | Business
Greece asks to join the euro
20 Jan 00 | Business
Greece eyes the euro
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