European central bank policy is already taking place today in an
informal way. It comprises, in short, European exchange rate management
and interest rate policy decisions within and without the European
Monetary System (EMS). A focal point of such policy actions are the
money market operating targets of European Central Banks. Those central
bank policies appear to be dominated, however, by the Deutsche
Bundesbank. This has caused recurring critical discussion of European
asymmetries and German leadership in monetary stabilization pOlicies,
before and after the EMS turbulences of September 1992. However, it
should be pointed out that German dominance has increasingly evolved in
a cooperative way, ever since the Committee of European Central Bank
Governors began to meet regularly in 1964; the Basle-Nyborg accord of
1987 formed a further stage of cooperative efforts within the EMS.
Presently, a small group of countries (including Benelux and Austria)
generally follows, after prior 'concertation', German monetary policy
patterns. In this narrow sense, there exists a European central bank
policy within a "Deutsche-Mark-Zone". In a broader sense, European
central bank policy is shaped, after proper consultation, by monetary
cooperation between the larger EMS countries, but once again dominantly
influenced by Germany; recent problems of highjnterest rates in France
and elsewhere due to (relative) restrictive German monetary pOlicies are
striking examples. German monetary dominance, in the narrow or broad
sense, obviously creates, in the long-run, an untenable situation in the
eyes of European partner countries.
