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Italy set to rejoin ERM

John Willcock
Sunday 11 August 1996 18:02 EDT
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The lira, which was knocked out of the European exchange rate mechanism at the same time as sterling four years ago, is set to re-enter the ERM next year. The planned move will highlight Britain's growing isolation in the debate over monetary union.

The Italian treasury minister, Carlo Azeglio Ciampi, said that the lira should be able to return to the ERM under terms outlined in 1997's budget, which will be presented next month.

"We should reasonably be able to re-enter [the ERM] as soon as we have the 1997 budget," Mr Ciampi told La Repubblica in an interview at the weekend.

"The ERM return is a short-term target," he added. Next year's budget has to be presented to parliament by the end of September.

Mr Ciampi said talks with European partners on the lira's return to the currency grid had been "very positive" and indicated that further discussions would be held next month. "We have two important meetings in September, the EU finance ministers meeting and the G7," he was quoted as saying.

An informal meeting of EU finance ministers is due to be held in Dublin on 22 September. It was not immediately clear which meeting of Group of Seven leading industrialised nations Mr Ciampi was referring to.

The lira crashed out of the ERM at the height of a currency crisis in 1992. Prime minister Romano Prodi has said he wants the lira back in the exchange system by the end of the year. Mr Ciampi told La Repubblica that it was important for Italy's international credibility to push the lira back into the ERM.

The euro currency is scheduled to be launched in 1999, with founder countries due to be chosen on the basis of whether they meet tough financial criteria in 1997.

According to latest government targets, Italy will fail to meet at least two of the goals laid down in the Maastricht Treaty, but Mr Ciampi suggested that European Union ministers might not stick rigidly to the treaty provisions.

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