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Banks told to prepare for EMU

Thursday 24 April 1997 18:02 EDT
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With only 428 working days left before the launch of the single European currency, the Bank of England yesterday warned against complacency over preparations. Even if Britain does not join in the first wave, banks will need to start altering their computer systems within the next few months, writes Diane Coyle.

But banks' ability to take this advice, in the latest quarterly update on preparations for the euro, depends on decisions at the pan-European level, many of which have not yet been taken. The Bank urges the European Monetary Institute and EU Commission to press ahead with decisions on key issues.

The Bank's warning not to count on EMU being delayed concerns preparations in the City's financial markets rather than high street banks and shops. The focus of this quarter's report is how London's financial markets must adapt to the new currency, and it includes the recommendations of a working party concerning issues such as whether and how different types of security should be re-denominated from national currencies into euros. But even though UK practitioners have reached a conclusion, Europe-wide agreement is still needed, the Bank said.

The Bank of England is continuing to lobby the French and Germans over Target, the planned inter-bank payments system under the single currency. It has so far failed to win their agreement that the UK can use the system if it opts out of EMU.

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