The Bundesbank is Europe's most powerful central bank and so the views of its president, Dr Hans Tietmeyer, who visited Dublin yesterday, are always newsworthy. The Bundesbank president chooses his words carefully. The Maastricht Treaty and its time table are in place and the Bundesbank, along with all the other central banks and the EU governments, must work within its terms. Dr Tietmeyer is careful not to say otherwise, but reading between the lines it is clear that the Bundesbank wants monetary union to proceed on schedule only if it judges that the economic conditions are right.
To reinforce this point, the Bundesbank president underlined his intention to push for a strong enforcement of the criteria which states must meet to qualify for the economic and monetary union. This is necessary, he said, because the new euro - the name chosen for the single currency - must be at least as strong as the deutschmark if the entire project is to be acceptable in Germany and to provide the anticipated economic benefits to Europe.
Dr Tietmeyer would not be drawn on how the sometimes ambiguous terms of the treaty should be interpreted, a point of major importance to Ireland. But he did make the telling point that any prospective member must be able and willing to last the pace in the long term.
Because of our close trading links with Britain, a key issue for Ireland will be what happens to currencies which do not join the monetary union. The risk is that if Ireland were to join and Britain stay out, a sharp depreciation in the value of sterling could disadvantage Irish exporters and cost jobs. The Government will thus welcome Dr Tietmeyer's strong preference for a system designed to prevent currencies outside the monetary union from fluctuating too widely against the euro. However, it will not be easy to agree such a system; some of the excluded states may not wish to give commitments about how they will manage their currencies.
There was also bad news for Ireland in Dr Tietmeyer's trenchant opposition to any kind of stabilisation fund in the economic and monetary union. The fund has been floated as a means of helping states hit by particular economic shocks, such as a sharp devaluation of the currency of a trading partner.
It is particularly sobering that Dr Tietmeyer's "earning came on a day when up to 2,000 jobs were lost in Shorts after the collapse of the Dutch Fokker company; job losses which underline the potential vulnerability of industry on this island to economic forces beyond our control.
That said, the stabilisation fund issue may still be discussed in the months ahead after all it is governments and not central bankers who will make the final decisions - but German opposition to the concept wills be hard to overcome. The central message for the Government from Dr Tietmeyer was that it will be up to individual member states to run their own policy successfully in a monetary union which provides low interest rates and currency stability Nobody will be there to bail out a state which runs into difficulty.