1. SUMMARY. THE EC COMMISSIN'S REPORT TO THE COUNCIL
(POUCHED TO EUR/RPE ON JULY 2, 1973) HAS NOT YET BEEN
SERIOUSLY STUDIED IN THE COMMUNITY. THE FIRST RE-
ACTION OF MANY OF OUR CONTACTS, HOWEVER, IS THAT
THE PROPOSAL IS A BOLD ONE CONTAINING A NOVEL EMPHASIS ON
PROGRESSIVE POOLING OF RESERVES DENOMINATED IN A UNIT OF ACCOUNT
THAT WOULD BECOME A SETTLEMENT AND RESERVE INSTRUMENT. PRELIM-
INARY INDICATIONS HERE ARE THAT THE UK, ITALY AND THE SMALLER
MEMBER STATES -- WHILE NOT NECESSARILY ADVOCATING EARLY
ACTION -- GENERALLY FAVOR THE PROPOSAL WHILE THE
GERMANS AND FRENCH ARE FAR MORE RETICENT. THE MONETARY
AND CENTRAL BANK GOVERNORS' COMMITTEES AND THE SO-
CALLED THERON GROUP WILL SUBMIT REPORTS ON THE PROPOSAL,
AND THE EC FINANCE MINISTERS MAY HAVE AN INITIAL
DISCUSSION OF IT BY LATE OCTOBER. OUR SOURCES TELL US
THERE MAY BE POLITICAL PRESSURE TO TAKE SOME CONCRETE ACTION,
EVEN IF LARGELY SYMBOLIC, BY THE BEGINNING OF 1974. END
SUMMARY.
2. THE COMMISSION'S PAPER ON PROGRESSIVE POOLING OF
RESERVES AND ADJUSTMENT OF SHORT-TERM MONETARY SUPPORT
ARRANGEMENTS GREW OUT OF THE COMMUNITY'S COMMITMENT
TO ESTABLISH ECONOMIC AND MONETARY UNION BY DECEMBER 31,
1980, A COMMITMENT WHICH, AS THE COMMISSION'S PAPER
NOTES, WAS REAFFIRMED BY THE EC SUMMIT IN OCTOBER 1972.
THE PAPER DEALS PRINCIPALLY WITH THE CONDITIONS FOR
PROGRESSIVE POOLING OF RESERVES AND IMPROVEMENT OF
COMMUNITY CREDIT MACHINERY. IT ALSO STRESSES THE
IMPORTANCE OF A) STRENGTHENING COORDINATION OF MEMBER
STATE MONETARY POLICIES; B) JOINT ACTION ON INTER-
NATIONAL MONETARY PROBLEMS, AND C) GIVING THE COMMUNITY
"A WATCHING BRIEF" ON CHANGES IN COMMUNITY EXCHANGE
RATE RELATIONS. WITH REGARD TO THE LATTER POINT, THE
PAPER SAYS THAT AS A RESULT OF GROWING ECONOMIC INTER-
DEPENDENCE WITHIN THE COMMUNITY, AN EXCHANGE RATE POLICY
MUST ALLOW FOR "COMMUNITY DIMENSIONS AND NOT BE THE
SOLE RESPONSIBILITY OF THE MEMBER STATES". WE BELIEVE
THE COMMISSION'S VIEW ON EXCHANGE RATES IS NOTEWORTHY
IF ONLY BECAUSE IT WAS SURROUNDED WITH CONTROVERSY WHEN
IT APPEARED IN THE ORIGINAL DRAFT AND FACED POSSIBLE
ELIMINATION IN THE FINAL VERSION...
Source: https://www.wikileaks.org/plusd/cables/1973ECBRU04614_b.html
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