(21 Mar 1995) German/Nat
A top level meeting of French and German finance ministers in Paris today (Tuesday) failed to produce a game plan to eliminate exchange rate volubility.
The German ministers stressed they saw no reason for German interest rates to fall .
The high level meeting in Paris between the finance ministers and officials from France and Germany failed to come up with a cure-all to eliminate exchange rate volubility.
They rejected any notion that the Bundesbank ever said it would adapt its monetary policies to the situation in the currency markets.
Instead they said what was needed were credible economic and monetary policies and the German minister specifically called for American action to support the dollar.
SOUNDBITE: (English translation)
We are still of the opinion that the dollar in relation to the economic fundamentals (of the US economy) is still undervalued. And we expect that the American government will make all effort to support the American currency through convincing financial and economic policies.
SUPERCAPTION: Dr Guenther Rexrodt, German Minister of Economic Affairs
But the chairman of the Bundesbank dampened hopes for a drop in German interest rates to stabilise world currency markets.
SOUNDBITE: (English Translation)
Our financial market interest rates have been below five per cent for some time and are therefore in relation to the Swiss and Japanese financial interest rates, quite low. They also reflect the general state of the German economy.
SUPERCAPTION Hans Tietmeyer, Chairman Bundesbank
In July 1994 , the Bundesbank froze its benchmark for the German money market at just below five per cent (4.85% ) and hasn't shifted the rate since then.
On the subject of European economic and monetary union, Tietmeyer said the most important contribution the Bundesbank could make would be to pursue credible economic policies.
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