CURRENT STRAINS ON THE EMS SOURCE OF BUNDESBANK CONCERN

CURRENT STRAINS ON THE EMS SOURCE OF BUNDESBANK CONCERN

The recent rise in German interest rates is straining the European Monetary System, which is of concern to the Bundesbank, Bundesbank Director Otmar Issing told the VWD news agency. In an interview with VWD, Mr. Issing said the strain on the EMS exchange rate mechanism as a result of the Dec. 19 rise in German interest rates could not be disguised.

''Of course, we see (that strains have arisen) . . . and it does cause us concern. We don't wish to force our partners into policies which don't reflect their problems and situations," Mr. Issing told VWD.However, Mr. Issing said the Bundesbank could not change the mechanism of a fixed exchange-rate system.

"It has to be recognized that the room for maneuver in a fixed-rate system is very limited," Mr. Issing said.

As far as an EMS realignment was concerned, Mr. Issing said the subject remained a "taboo" topic, but it was not the Bundesbank's responsibility to plead for a realignment, it said.

Mr. Issing said the current strains in the EMS were an example of what happened in a fixed-rate system when the economic conditions in the different member countries were different, it said.