Bundesbank chief economist Mr Otmar Issing yesterday warned that investor confidence in the planned European single currency, the euro, was being undermined by recent talk of a possible softening of the entry criteria.

Mr Issing said efforts by states to "window dress" their economic position to make the grade in 1997, the key year for judging which nations can join monetary union in 1999, were not helping to counter growing mistrust.

"Recent calls for a `political interpretation' - the euphemism for a softening - of the fiscal convergence criteria are likely to have further unsettled investors in their concern about the value of their savings," Mr Issing said in a speech.

"Confidence in the stability of the future currency, the euro, is above all endangered by fears about a softening of the entry criteria."