European Currency Unit

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 27th June 1991.

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Photo of Mr Bill Michie Mr Bill Michie , Sheffield, Heeley 12:00 am, 27th June 1991

To ask the Chancellor of the Exchequer if he will outline the latest developments of his hard ecu proposal.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The United Kingdom proposals for a hard ecu have stimulated debate in the intergovernmental conference on economic and monetary union. A number of other countries have put forward proposals based on similar ideas to harden the ecu. Negotiations in the conference are continuing.

Photo of Mr Bill Michie Mr Bill Michie , Sheffield, Heeley

As no one now takes the hard ecu proposal seriously—some think it a joke and others a mere diversion—would it not be wise to drop it and negotiate instead on the more substantive issues?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The hon. Gentleman is talking complete nonsense. On Monday I discussed the hard ecu with the French Finance Minister, who was certainly interested in the idea. Not just France but other countries want to see some form of hardened ecu or a common currency before stage 3, and this whole area of debate was stimulated by our original proposal. I do not know whether the hon. Gentleman claims to be an expert, but he is talking complete nonsense.

Photo of Mr Tim Janman Mr Tim Janman , Thurrock

While I agree with my right hon. Friend's proposals for a hard ecu plan, does he agree that moving to a 21 per cent. band in the ERM would make it more likely that we would have a single currency imposed on us?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

It is true that when one has narrow bands within a fixed rate system, it is a smaller step from there to a single currency. That is obvious.

Photo of Mr Chris Smith Mr Chris Smith , Islington South and Finsbury

The Chancellor will be aware that in yesterday's debate on Europe the Financial Secretary and the Foreign Secretary—the same has been true of the Chancellor today—were conspicuously careful to talk about a "hardened" ecu rather than a hard ecu. There is, of course, a world of difference between a tightening of the existing basket calculation for the ecu and the institution of a parallel currency for use throughout the Community. Has there been a shift in Government policy on the issue and, if so, is it true that the hard ecu proposal as it stood before is now where it should have been before—dead in the water?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The hon. Gentleman is also talking nonsense. These are not different ideas that are a world apart—there are various degrees of hardening the ecu along a spectrum. These ideas all have a lot in common and we are not the only country to have expressed an interest in a parallel currency. I assure the hon. Gentleman that the discussions on some variant of the existing basket ecu are continuing and that other countries are interested in them.