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EU realignments must be decision among peers-Italy

VERONA, (Italy): Italy agrees a revised version of the ERM will be needed to ensure stability in the European Monetary System with the creation of a single currency.

But it believes that any realignment decisions within the new system should rest on both the national central banks and the European Central Bank on a collegial basis.

Decisions on realignments "must be a dialogue among peers, between national central banks and the European Central Bank", Italy's deputy Treasury Minister Mario Draghi told journalists on the eve of the informal meeting of European Union finance ministers here.

Draghi said there is broad agreement on the general principles of a new system which should ensure continuity with the current Exchange Rate Mechanism as well as stability, and be anchored to the Euro.

"Italy favours such a construction," Draghi said, noting that it meets the favour "of a majority of countries".

The system, however, "must have a certain flexibility, with (fluctuation) bands, and be open to realignments".

Draghi admitted, however, that much discussion was still necessary over a series of technicalities. Questions apparently still completely open include the wideness of the fluctuation bands, the role of the future European Central Bank, and how to coordinate any intervention in favour of currencies experiencing difficulties.-Reuter