EU leaders will this weekend formally choose the founding group of states for monetary union and the rates of exchange at which the participants' currencies will lock together. These decisions will largely be a formality; the EU finance ministers last night recommended that 11 states should participate in the launch of the single currency and these currencies will almost certainly be locked together at their current ERM central parities.
The intention was that the weekend EU summit would have a celebratory tone and demonstrate to Europe and the world that the single currency project was well and truly on track. But a damaging row over the presidency of the EU central bank has dragged on and is an unwelcome addition to the agenda. It is more than just a dispute over who will get a senior position. Crucial to the project's success is that the new euro currency should quickly win the confidence of the financial markets - and of the people. And this is why the choice of the first president of the central bank, the organisation which will manage the currency, is vital.
The vision of the Maastricht Treaty was that a central bank relatively free from political influence and headed by a president with an eight-year term would help to underpin the independence of the institution and foster confidence in it. But the launch of the bank has already been damaged by the squabble over whether it will be headed by Dutchman, Mr Wim Duisenberg or Frenchman, Mr Jean-Claude Trichet. It is a needless row, started by the surprise nomination by the French government of their candidate.
The best solution to the row would be to appoint Mr Duisenberg for a full eight-year term. But it appeared last night that a compromise would be struck under which he would not serve the full eight-year term and would stand down at some stage to allow Mr Trichet to take over. Final judgement must await the news from Brussels today on what compromise is reached. But such an arrangement would be risky and could damage the reputation of the bank and its president as standing independent of political influence. One clear danger would be that after a few short years in office, the first incumbent would already be nearing the end of his term and would thus struggle to maintain his authority as the financial markets started to speculate on what direction his successor might take.
It is a pity that much of the focus will be on the central bank squabble, for the other decisions being formalised this weekend are historic and represent another milestone in the Union's development. The leaders will give the go-ahead for 11 of the 15 EU members to be founder members of the new euro currency. The new euro-zone will account for 18 per cent of world Gross Domestic Product, be the world's largest exporting bloc and - at 291 million people - have a larger population than either Japan or the US.