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Germans Dismiss Report of Bank Deal

December 29, 1997

BONN, Germany (AP) _ The Finance Ministry on Monday dismissed as ``speculation″ a magazine report claiming that Germany is ready to compromise with France over who should be president of the future European central bank.

According to the newsweekly Der Spiegel, Chancellor Helmut Kohl is offering Paris ``a sensible compromise″ in which France’s candidate for the job would split the first eight-year term with the Dutch candidate Germany prefers.

The new central bank is to start operating in 1999 with the introduction of Europe’s common currency, the euro. Based in Frankfurt, it will in effect take over from Germany’s powerful central bank, the Bundesbank.

France has proposed its national bank chief, Jean-Claude Trichet, to head the central bank. Most other European Union members favor Dutchman Wim Duisenberg, head of the bank’s forerunner, the European Monetary Institute.

Under a deal laid out by German Finance Minister Theo Waigel, Trichet would be ``parked for four years″ at the head of the European Bank for Reconstruction and Development, which helps eastern Europe, Der Spiegel said. Duisenberg would resign midway through the term to make way for Trichet.

The magazine, on newsstands Monday, did not say where or to whom Waigel made his comments.

``We are dismissing this as speculation,″ Finance Ministry spokesman Boris Knapp said of the report.

Der Spiegel said such a deal would be ``a seedy compromise″ because the EU treaty setting out the way to monetary union foresaw a long, one-time term precisely to safeguard the central bank’s freedom from political interference.

The report also said Kohl denied having made a deal with former French President Francois Mitterrand to let a Frenchman become the European central bank’s first president in return for Paris agreeing to have the bank based in Frankfurt.

``Pure fabrication,″ the magazine quoted Kohl as telling aides. ``That is simply wrong.″

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