Nearer to Eurocurrency

Proponents of European unity have long dreamed of creating a single Common Market currency. Lately the finance ministers of the Market nations have taken a long step toward that goal by limiting the distance that their currencies can fluctuate against each other in the world's money markets.

The accord, which is to take effect by July 1, reduces the "trading margins" of the six member currencies from 4 1/2% to 2 1/4%. In practice, that will mean Common Market currencies can drift no more than l 1/8% either above or below the midpoint of the new 2 1/4% band. When any one currency reaches its upper or lower limits, the central banks of member countries will intervene by buying or selling each other's currencies. Until now, the banks have done this by buying or selling dollars.

In the long run, the pact threatens to depose the dollar as the pre-eminent currency in international trade. Reason: Common Market moneys will still be able to fluctuate within the present band of 4 1/2% against the dollar, even though the margin is halved with respect to each other. European importers and exporters will no doubt feel safer issuing invoices in one of their own currencies, which can fluctuate only half as much as the dollar. Even a spokesman for the East German government declared that his country is "no longer interested" in trade deals set in dollars. Multinational corporations will probably convert more of their dollar holdings into Common Market currencies. Such selling of the dollar may tend to reduce its price in world money markets.

The day of a truly unified Eurocurrency--or "Euro" as moneymen call it --is still far away. Treasury Secretary John Connally, for one, is not overeager to see that day arrive. With a single currency, he fears, Europe may congeal into a unified economic bloc competing against the U.S., and the Europeans may let their currency float downward against the dollar whenever they want an added trade advantage against the U.S. At present, national rivalries prevent such truly coordinated action.

The Common Market ministers did not specify any details for the eventual replacement of francs, marks, guilders and lire by some supranational monetary unit. An alternative might be that the Common Market currencies will continue to exist side by side, with each bank note carrying a printed table of its equivalent value in sister currencies. Already the ministers have agreed that the trading margins of their money will eventually be reduced to zero.

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