	economic spotlight ems marks eighth birthday the european monetary system marks its eighth anniversary still vulnerable to turmoil in world money markets despite creating an island of currency rate stability in europe economists say but many economists say the system which holds eight european community currencies within narrow fluctuation bands remains in its infancy its new currency the european currency unit ecu has been a runaway success with investors and borrowers alike seeking an alternative to the volatile dollar and on wednesday the long term vision of the ecu as europe s common currency took a step nearer to becoming reality when belgium minted the world s first ecu coin but economists say members such as west germany have so far blocked a second stage of development envisaged by the system s founding fathers ex west german chancellor helmut schmidt and former french president valery giscard d estaing under this phase originally due to have started two years after the ems was set up decision making was to have been transferred from national governments and central banks to an autonomous european monetary fund but members have jealously guarded their sovereignty in economic and monetary matters the basic problem of the ems is that governments are not prepared to make the quantum leap to a situation where certain decisions are taken in common said one economist who has closely watched the system s development the result is that the ec is often divided over policy on third currencies accentuating what the economists say is the system s greatest weakness its vulnerability to a weak dollar over the past months as the u s dollar plunged and investors moved into strong currencies the resulting sharp rise of the west german mark severely strained the system another frustration has been britain s failure to lend the ems political support by keeping the pound still a major world currency outside the system no change in the british government s attitude is expected before the country s next general elections due by mid meanwhile the system s last realignment the th since it was set up prompted european finance ministers to ask the ec s highly secretive monetary committee and committee of central bank governors to come up with suggestions for reinforcing it their ideas are due to be unveiled when finance ministers hold an informal meeting in belgium early next month but economists said the proposals are unlikely to involve more than tinkering with technical details they are sceptical about the chances for any fundamental change technical measures won t be enough to protect the ems against external factors such as dollar weakness for that we must take the step forward to the institutional level said leo de corel of kredietbank s economic research department economists say the system s fortunes now will depend largely on the success of an agreement last month among major industrial nations to stabilise exchange rates if the dollar resumes its slide the ems could be in for more turbulence they predict reuter 
