As I explained in the explanatory memoranda that I submitted to the Scrutiny Committee, the committee of European central bankers will consider the co-ordination of monetary policy, but will have no powers to impose its views.
As it is becoming clear that the German Bundesbank is keen to establish itself as a central bank for western Europe, what is the policy of the Government and the Bank of England? Is it not fair to say that the Governor of the Bank of England wants more independence from the Treasury, and would like the Bank of England to operate in a similar way to the German Bundesbank?
It is not fair to say that the Bundesbank has the ambition that the hon. Gentleman has ascribed to it. The governor of the Bundesbank has expressed considerable sympathy with the ideas that we have put forward for the evolution of monetary union, as have the governors of the central bank of Switzerland, the board of academic advisers to the German Finance Ministry, and the leading French economist and Nobel laureate, Professor Allais. There is a great deal of support for our views on European monetary union.
While considering the role of the central banks, will my hon. Friend reconsider the position of the Bank of England? Does he agree that if the Bank of England had had the same powers and role as the Bundesbank, inflation would not be as high as it is today?
My hon. Friend knows that we considered that idea some 18 months ago, and we concluded that it is difficult to have a constitutionally independent central bank, such as exists in the United States and West Germany, within our Westminster constitution because the House, on behalf of the British people, expects the Government to be accountable and responsible for monetary and economic policy.
Treasury Ministers have reiterated several times today their intention to take sterling into the exchange rate mechanism when the conditions are right. Every time the Prime Minister opens her mouth, however, she adds to the list of those conditions, and it is clear that the Government have no intention of taking sterling into the ERM at an early stage. Does that not leave us very much on the sidelines in the developing discussions about our European monetary future, and should we not be playing a much more constructive part?
We have made our position very clear: we shall join the exchange rate mechanism of the European monetary system during stage 1. What is unclear, and what the shadow Chancellor was unable to tell us during a debate on the subject, is what the Labour party's conditions are. Are they the four that he enunciated, the three enunciated by the Leader of the Opposition or all seven?