Mr Wim Duisenberg, president of the European Central Bank, yesterday declared the introduction of the euro a success. He insisted that all the main technical systems had coped well during last week's transition to the single currency.

But he was worried about a conflict with European governments and he warned politicians against adopting an explicit exchange-rate policy for the euro.

Speaking at a news conference after the first meeting of the ECB's governing council since the currency was launched on January 1st, Mr Duisenberg said exchange rate target zones were unworkable and potentially inconsistent with the ECB's primary objective of stable prices.

His comments came as evidence emerged that Euribor, the reference rate set by the European Banking Federation for inter-bank lending, was displacing the long-established Euro Libor rate, set by the British Bankers' Association. Mr Brian Williamson, chairman of the London International Financial Futures and Options Exchange, said up to 80 per cent of money-market deals in the euro this week had been based on Euribor rather than Euro Libor. Analysts had expected a drawnout battle between the two benchmarks.

The move is a blow to London's position as the leading financial centre in Europe. Libor was the only serious reference rate for trading in deutschmarks and lire before monetary union. Mr Duisenberg's comments came on the first day of a European tour by Mr Keizo Obuchi, the Japanese Prime Minister, who has been lobbying for a policy of managed exchange rates for the US dollar, the euro and the yen. Many European governments support explicit target zones for the euro, fearing that excessive appreciation of the euro against the dollar could stifle economic growth and increase unemployment.

Mr Duisenberg insisted the ECB would not follow a policy of benign neglect towards the exchange rate.