Europeans Weigh Impact Of Single EC Currency

PHILIP Jenkinson may be British, but he lives in France, and as a business attorney he has clients in all 12 countries of the European Community. For Mr. Jenkinson, the process of economic integration under way among the EC's 12 member states - a process that is gradually reducing inflation- and interest-rate disparities, and thus making for a more stable, Europewide economy - can't help but be good for business.

The eventual goal of a single EC currency, he says, will also make conducting business easier - right down to facilitating the traveling he must do to keep his clients informed and his business growing.

``Imagine setting out from Vermont on a business trip around New England,'' says the Lille attorney, ``and having to remember to maintain three or four purses of different currencies.''

The EC's single market is set to take full effect at the end of December 1992. Yet for people like Jenkinson, and for political leaders who want to see Europe's international economic influence enhanced, that is not enough.

EC leaders have thus decided to move forward with creating the economic and monetary tools that are still needed for the single market to develop its full potential. Last month in Rome, all heads of state but one - Britain's Prime Minister Margaret Thatcher - agreed to a 1994 start for the next stage of the Community's economic integration.

As of that date, a European central bank similar to the United States' Federal Reserve System is to be set up, and steps for further reducing some still-wide discrepancies among EC economies are to be implemented.

Yet while the decision to push ahead on economic and monetary union - what is simply called EMU - has been taken, the details remain to be worked out.

This will be done at an intergovernmental conference set to begin Dec. 13 in Rome. The composition and governance of the ``Eurofed,'' as the European Central Bank is already called, has been established. How it will work with national central banks, and when it should take over monetary responsibilities from them - has not.

``The decisions to be taken are mostly of a technical nature,'' says Daniel Gros, a senior research fellow at the Center for European Policy Studies in Brussels. ``But there will be a need for changes that bring inflation and interest rates in line throughout the Community.''

This means that the virtually stable monetary zone that takes in Germany, France, Belgium, the Netherlands, and Luxembourg, and is based on the low-inflation policies of the Bundesbank (Germany's central bank) will be extended over the Community.

Despite the conference's technical nature, Mr. Gros notes that its decisions will affect everyone in Europe. ``Trade unions, for example,'' he says, ``are going to have to get used to asking for pay increases that are basically in line with Germany.'' Countries like Italy and Spain that have built up large budget deficits will have to cut back on spending.

The cross-border financial stability that should result will be good for business development, analysts say. ``This means that European businessmen and investors won't have to worry about the effect of fluctuating exchange rates on inter-currency investments,'' says J. Paul Horne, an international investment specialist with Smith Barney here. ``With the Community trying to encourage trans-border investing and trans-border mergers, that's important.''

Although the 1991 intergovernmental conference will make no definite decision on whether Europe will have a single currency - EC leaders won't make that decision before 1997 - the conference ``will prepare the ground for that decision to be taken,'' says the CEPS's Gros.

But if a recent poll commissioned by the Association for the Monetary Union of Europe is any indication, a majority of Europeans want a single currency. In the poll released Nov. 6, 61 percent of Europeans said they favored replacing their national money with the European Currency Unit in five to six years.

A majority of respondents from all countries except Britain and Denmark support a single currency, according to the poll.

In Britain, the question of some day giving up the pound stands at the heart of a heated debate over issues of national sovereignty and European integration.

``As a Brit, it would sadden me [to see Sterling replaced], says Jenkinson, ``but as a European, I'd feel compelled to accept the majority view.''