ermany's central bankers seem to be having second thoughts. A week after his organization issued a 35-page report vouching for the financial health of all 11 would be charter members of European Economic and Monetary Union, German Bundesbank president Hans Tietmeyer, in testimony before two Bundestag committees, appeared less than convinced. He noted that about half of Italy's public debt was due for repayment within a year and that Belgium also has a hefty short-term debt. Tietmeyer's qualms were later reinforced by Bundesbank council member Reimut Jochimsen who told Reuters he was "irritated" that the bank's report had been viewed as approval for all 11 candidates because "people wanted to get a certain message." Warned Jochimsen, "The launch of monetary union is a political decision and child's play compared to the continuous effort needed to make it workable and not fail."

Leadership of the European Central Bank may have been settled last week when several papers reported that Dutchman Wim Duisenberg will be named to a full eight-year term as its president. German Chancellor Helmut Kohl has reportedly convinced the French to shelve their opposition to Duisenberg in exchange for a French citizen being named president of the European Bank for Reconstruction and Development. A German government spokesman cautioned that discussions were continuing, but said there were "good chances" for an agreement before the formal adoption of the euro regime on May 1-2.

European economists are predicing a strong euro for a year from now. The Reuters news service surveyed 38 economists whose average forecast was that the euro would trade for $1.10. The predictions ranged from around 77 cents to $1.23. Alison Cottrell, chief international economist at Paine-Webber, London, thinks the euro will start off strongly because worries over a soft euro are already built into exchange rates of the 11 constituent currencies. Vigorous European economic growth, coupled with a likely slowdown in the U.S., should also give the euro an initial boost.

But a strong euro will also mean lower interest rates, at least in some EMU members. The Organisation for Economic Co-operation and Development warns that five of the initial member countries will see rates move lower to converge with those set by Germany. As a result, it says, the economies of Finland, the Netherlands, Ireland, Portugal and Spain "face an increasing risk of overheating." Low interest rates could cause property and share prices, and wages, to spike, making those countries' exports costly. Since currency devaluation is no longer an option, the result could be a deflationary recession. To help avert that scenario, the O.E.C.D. suggests those countries continue reforms to tighten fiscal policies.

Defying their Socialist coalition partners, France's Communist Party refused to support a government bill ending the Bank of France's responsibility for monetary policy and transferring this function to the new European Central Bank. In a strange-bedfellows alliance, the Communists were joined by a handful of Gaullist and centrist deputies who defied their party leadership to oppose the measure on the grounds that it would weaken French national sovereignty. Socialist Prime Minister Lionel Jospin nonetheless mustered a 117 to 28 majority in favor of the bill, even though his other coalition partners, the Greens, abstained. The new law is required before France can join EMU on January 1, 1999.