Single currency planned for 2003

Europe can expect to see the launch of European Monetary Union on 1 January 1999, with a single currency circulating in 2003, if an outline agreement reached by European finance ministers in Versailles continues to receive political support.

Ministers of the 15 member states reached consensus on many of the major outstanding issues relating to how and when monetary union will unfold. Prototype two-tone European coins were unveiled at Versailles for the first time.

The meeting was theoretically "informal" and its recommendations will go to the Cannes summit in June. However, Versailles may bea turning point, with all ministers, including Kenneth Clarke, the Chancellor, showing overwhelming interest in practical progress.

The main areas of consensus were:

n The timetable. The decision on which countries will join will take place in 1998, and the launch of EMU, starting with the locking of exchange rates, will begin on 1 January 1999. The minting and printing of coins will not start until 1999 and take at least three years to complete.

n Currency. There are to be eight coins and seven notes, but no decision was taken on the name. Ministers commissioned experts to design European and national emblems.

Mr Clarke continued to maintain at the meeting that Britain's opt-out option is realistic. He also suggested it was possible that the physical introduction of the money may not happen "for years and years".

After the major steps forward taken at Versailles it would be increasingly hard for Britain to stand on the sidelines. The overall message of the meeting was that the coming of monetary union and common notes and coins is now inevitable and that public education should begin.

However, the political progress at Versailles should be set against a sceptical report last week about the lack of economic and financial progress and sceptical comments by the German economics minister, Gunter Rexrodt.

The European Monetary Institute, forerunner of the European Central Bank that will preside over EMU, found that only two countries, Germany and Luxembourg, met the criteria for economic convergence set out in the Maastricht treaty for monetary union.

The EMI criticised member states for their performance against two of the key benchmarks: low budget deficits and levels of national debt. Here matters had got much worse rather than better.

New currency unveiled, page 8 James Fenton, page 15