LONDON: The president of the Bundesbank, Ernst Welteke, has said he thinks the pound would have to be devalued before Britain could join the single currency.

“The current exchange rate is a hurdle, that is for sure,” Welteke told a round-table discussion on Monetary Union organised in London by the German-British Forum and the Friedrich-Ebert Institute.

The governor of the powerful German central bank was speaking in the knowledge that the Bundesbank’s views on the pound’s ill- fated adventures within the European exchange rate mechanism have gone down in British monetary folklore. After the pound joined the ERM in 1990, the Bundesbank maintained it was not properly consulted about the appropriate exchange rate, and thought the pound was overvalued at DM 2.95.

In remarks that were interpreted as being friendly towards British membership of the euro, he told the meeting that, although the Maastricht Treaty insisted on two years membership of the ERM before entry to the single currency ‘in the end it’s a political decision’ as to whether ERM membership is necessary. Chancellor Gordon Brown is known to be vehemently opposed to re- entry to the ERM.

At first, in answer to questions, Welteke said about the pound’s present value: “If market participants are prepared to pay, then it must be the right price.”

But he added: “If you ask me personally about prices in London restaurants — my God, there must be something wrong with the exchange rate.”—Dawn/The Observer News Service.