European monetary union is not irrevocable and we should be aware of the consequences of a possible future break-up of Emu before monetary union really commences," warned Neil Record of UK-based currency managers, Record Treasury Management at a recent conference on investment management and the Euro in London.

Record outlined one of the possible dangers to Emu as the political ramifications which could follow the in-creasing levels of unemployment in France and Germany.

This, he ar-gued, could lead to an increasing popularity of far right politics, political instability and a resulting withdrawal from Emu, which parties such as France's National Front advocate. He also expressed concern that Germany could become what he described as the "disgruntled paymaster" of Emu if countries such as Italy could not maintain the economic conditions met to gain entry into the euro eleven.

"This could lead people in Germany to start calling for withdrawal from Emu and indeed concerns are already being raised about such an eventuality. Personally, I feel that if anyone abandons monetary union, it will be one of the larger member states and obviously the consequences will be serious," he said.

Such a scenario, he suggested, would lead to enormous worry over currency devaluation if a country has to redenominate, as well as a shifting of Euro assets cross border from any parting member and in turn a sharp increase in interest rates.

However, at the same conference Alick Stevenson, director of pension fund asset management at Nortel outlined the need to be ready for Emu.

"Pension fund trustees need to be convinced the move towards Emu is solid and robust and also to know what if any transitions will be needed before any monetary union commences."

Citing questions over investment style, accountacy system compatibilities and performance standards, as issues needing to be addressed, he suggested co-operation between companies to enable investment managers to "get up to speed," with the prospect of Emu looming on the horizon."

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