EC Leaders Pick Frankfurt as Central Bank Seat

BRUSSELS â€”  Twelve European Community leaders on Friday celebrated completion of an accord that aims to bind their countries in a political and economic union, then took the first concrete steps required to implement the far-reaching document.

The Maastricht Treaty, which calls for economic and political union by the end of the decade, takes effect Monday.

In the most important and controversial of the new steps, the leaders selected Frankfurt as the seat of a European central bank and its predecessor institution needed to prepare an eventual European monetary union. A European Monetary Institute is expected to begin work next January in the German financial capital.

Both London and Amsterdam had bid for the two institutions, and many were unsettled at the prospect that a future European central bank would only add muscle to Germany, already the richest and most powerful of the Community countries.

Many found it even worse that the bank would be in the same city as the German Federal Bundesbank, an organization whose tough, narrowly focused actions in the last 18 months may have been good for Germany but have generated intense strain in other EC countries.

Germany had insisted on the Frankfurt location as a condition for its backing of monetary union.

The central bank would come into being in the final stages before members nations abandon their deutschemarks, francs, pounds and crowns for a single currency.

That goal was originally scheduled for the end of the century until last summer’s collapse of the European Monetary System.

Now, even strong advocates of a currency union agree that the present timetable is unrealistic.

The locations of 10 other, new EC agencies were also decided Friday, including: the European Environmental Agency in Copenhagen; a community police coordinating agency, Europol, in The Hague, and a training foundation in Turin, Italy.

The leaders also:

* Agreed on joint foreign policy initiatives in support of Middle East peace, democracy in Russia, economic revival in Eastern Europe and an end to the fighting in the former Yugoslav republics.

* Studied a plan to boost global competitiveness of EC industry and reduce unemployment.