BRUSSELS, May 30: Europe's single currency plans looked increasingly shaky on Thursday as a row between the German Government and its powerful Central Bank threw the whole project into question.

European Union officials insisted that all was well, but market analysts said either a delay or a weaker interpretation of the qualifications for monetary union was now likely.

Foreign exchange traders bought non-European currencies in an attempt to find safe havens until the dust from the current storm has settled.In Germany itself, officials traded accusations over the government's insistence that it would go ahead with a plan to revalue the Bundesbank's gold reserves in an attempt to increase receipts to the national treasury.

The row exploded on Wednesday when the Bundesbank, a fierce proponent of fiscal austerity in meeting the requirements for monetary union, publicly criticised the government's plans.

It said Bonn's scheme which calls for a special profit transfer to be made this year and next on the basis of the higher valuation of gold and currency reserves could undermine the Euro from the start.

German Chancellor Helmut Kohl and his government allies said they would go ahead regardless.

The move is seen in Bonn as essential for Germany to qualify for Economic and Monetary Union (EMU). However, any sign of falling back on creative accounting techniques is viewed in Frankfurt and elsewhere as an invitation to less worthy economies such as Italy to join the single currency.It also comes as France's commitment to strict economic convergence has been thrown in doubt by the French electorate.

Discontent over tax hikes, spending cuts and unemployment, partly due to EMU preparations, have damaged Prime Minister Alain Juppe's government which may be kicked out of power in an election next Sunday.

The European Commission, the single currency's watchdog, is keeping to the official line that economic and monetary union would start on January 1, 1999, in those countries precisely meeting the qualifications. ``For me, there is no risk concerning EMU. I'm confident the German government will be ready in due time,'' monetary affairs commissioner Yyves-Thibault de Silguy told reporters.

He underlined, however, that the principles of European accounting for budgets would be respected and there would be no ``fudging of the figures''.

Market analysts said the German row and French hesitancy meant the choice now was for either a delay in EMU or starting with more than just a hard core of fiscally sound countries. The dollar surged on the uncertainty, but many saw the German move as proof that Kohl would force EMU through no matter what, just as he overruled the Bundesbank in 1990 and granted East Germans a generous one-for-one swap of their feeble ostmarks for Deutschmarks.

The row gathered apace in Germany where a Bundesbank council member, Ernst Welteke, warned Kohl he had failed to win public support for EMU in Germany and that the tight-fisted Bundesbank would command more public sympathy than politician.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.