The Maastricht Treaty stipulates that the President of the ECB is invited to meetings of the EU Council meeting in the composition of the Ministers of Economy and Finance whenever there are issues on the agenda which are relevant to the ECB's tasks. The President of the Council of Ministers and a member of the European Commission may attend meetings of the Governing
Council, although they do not have the right to vote. The President of the
Council of Ministers may submit motions for deliberation. Apart from these formal contacts, there are many informal contacts, for example in the context of the so-called Euro-11 group of finance ministers from the euro area countries. I regularly attend meetings of this group.
Monetary policy cannot be used to solve structural problems, such as the unacceptably high level of unemployment in the euro area. Structural problems call for structural solutions, in this case measures targeted at making labour and product markets work more flexibly. The best contribution the ECB's monetary policy can make in this context is to maintain price stability. In this way one of the conditions for sustainable growth in incomes and employment is created. As important as this is, it should be realised that jobs are created by firms which are confident about the future and not by central banks.
5. Accountability and transparency
Accountability for policies is the logical complement to independence
in a democratic society. The Maastricht Treaty includes a number of
provisions in this respect. First, there is the mandate to pursue price
stability. This provides a qualitative measure against which the ECB's
performance can be measured. As I have already mentioned, we have decided
to enhance this by providing a quantitative definition of price stability.
One of the aims of publishing our monetary policy strategy is to make our
policy decisions transparent.
The ECB has to publish an annual report in which, inter alia, the
monetary policy of the previous and current year are discussed. I present
this Annual Report to the EU Council and to the European Parliament, which
may hold a general debate on the basis of it. The President and other
members of the Executive Board of the ECB may be heard by the competent
committees of the European Parliament. I have agreed to appear before the
European Parliament at least four times a year. The ECB has to report on
its activities at least quarterly. It has been decided to go beyond this
requirement and to publish a monthly bulletin.
It is my view that the main way to achieve accountability is through
being transparent and open. In passing, I should like to note that
transparency also enhances the effectiveness of a central bank. The better
it is understood, the more successful a central bank is. Apart from the
activities I have already mentioned, transparency is achieved in several
ways. Every month, after the first meeting of the Governing Council, the
Vice-President and I give a press conference. I start the conference with a
comprehensive introductory statement, in which I explain the decisions
taken by the Governing Council and the underlying analysis and arguments
for and against. This introductory statement is published immediately on
the ECB's Internet Web site. This is followed by a question and answer
session attended by several hundred journalists. The questions and answers
are also published on the Internet shortly afterwards. All the members of
the Governing Council frequently make speeches, give interviews and
contribute to journals and books. Thousands of people visit the ECB and the
national central banks each year and, for our part, we and our staff attend
many conferences and other public events.
6. EU enlargement
The European integration process continues. The euro should be made a
success. I have already explained how we have started the process of doing
that. Some observers have criticised the EU for its "obsession with its own
internal dynamics", in particular in the context of European Economic and
Monetary Union (EMU). With all energies focused on meeting the convergence
criteria and the preparation for the launch of the euro, Europeans outside
the EU have wondered whether EMU and enlargement are not mutually exclusive
objectives.
Let me briefly comment on this issue. After the historic decision to complete the European Single Market in the 1980s, it was felt that economic integration should not stop at that point. To fully reap the rewards of economic integration within the Community, a single currency was felt necessary; a logic pointedly encapsulated in the title of one report: "One market, one money".
Hence, the underlying idea of EMU was to advance European integration
and to ensure that full use would be made of the economic potential of the
Single Market. This idea continues to be the focus of European policy-
makers, as evidenced by the association agreements and the ongoing
accession negotiations with a number of European countries, Poland among
them. Good and mutually beneficial economic relations with third countries
in Europe and further afield are a pillar of EU policy orientation.
Recognising this, the principles of an open market economy with free
competition are enshrined in the Treaty on European Union. EMU will not
weaken this commitment, but rather reinforce it. Closer co-operation in
Europe and the respect of common principles in the political, economic and
social fields are likely to form the basis for further integration. The ECB
shall contribute to this process within the scope of its responsibility.
Countries wishing to deepen their monetary co-operation to the ultimate extent possible by forming a monetary union will have to adapt their economic and legal systems to the standards required by the Treaty and aim at a sufficient degree of economic convergence. In the absence of these conditions, adjustment costs for both current and new participants could be high. Any premature decision on the adoption of the euro could have severe repercussions on a country's competitiveness and trigger painful economic adjustments. Therefore, implementation of the necessary institutional reforms and of a sufficient degree of convergence should not be considered as an obstacle preventing further integration in Europe, but rather as an essential means of ensuring the lasting success of EMU, for existing and new participants alike. Looking at the impressive progress made in a relatively short time in this country, there is no reason to be pessimistic about Poland's chances of meeting these standards and convergence criteria. I shall not venture, however, to predict when this will be the case.
Even at the current juncture, though, EMU in one part of Europe is already having an impact on the whole region. Let me briefly mention two aspects:
* If the euro emerges, as I believe it will, as a strong and stable currency, it will provide the countries in the region with an important reference currency, an anchor towards which, should the intention arise, monetary policy could credibly be oriented.
* Furthermore, EMU is set to bring about the development of a truly unified European financial market, close to that of the United States in depth and sophistication. The competitive pressures of this euro area financial market will create more favourable financing conditions for borrowers. A number of central and eastern European countries have already successfully tapped this market.
In view of these effects, it is altogether natural that the ECB has
started to follow with great interest economic and financial developments
in the wider Europe, particularly in those countries which have applied for
EU membership. Moreover, the ECB monitors closely the exchange rate
developments with those countries which have established some form of
exchange rate link to the euro.
The euro has the potential to become more than just a new currency
for almost 300 million people in 11 countries. It may also become a
unifying symbol, standing for all that the peoples of Europe have in
common. Consequently, the public perception of the euro could endow the
single currency with a role in the European integration process reaching
beyond monetary policy in the strict sense. May the euro contribute to the
establishment of what the preamble to the Treaty Establishing the European
Community calls: "an ever closer union among the peoples of Europe".
***
The single European monetary policy
Speech by Willem F. Duisenberg
President of the European Central Bank at the University of Hohenheim on 9 February 1999, in Hohenheim, Germany
Ladies and gentlemen, The single European monetary policy has been a
reality for a little more than five weeks. After years of intensive
preparatory work and successful economic convergence, monetary policy is
now jointly determined for a large part of Europe by the Governing Council
of the European Central Bank. The monetary policy is implemented by the
Eurosystem, the name given to the ECB and the 11 central banks of the EU
Member States participating in Monetary Union.
The single currency is quoted on the international financial markets and is used in non-cash payments. However, the euro will not appear as yet in tangible form as banknotes and coins. Nonetheless there is no doubt that this currency, which was only brought into existence on 1 January 1999, will play an important role both within the euro area and beyond.
There is good reason for this confidence, ladies and gentlemen.
Overall the first few weeks went smoothly for the single currency and the
monetary policy of the Eurosystem. The start did not pass by entirely
without a hitch - which was not to be expected in any case, given the
significance and scale of this project - but there were no major
complications.
Monetary Union is a unique and outstanding achievement. It provides the great opportunity to achieve the goal of lasting price stability throughout Europe. Price stability is the best contribution that monetary policy can make to lasting economic and employment growth in Europe. The national governments and all those involved in collective wage bargaining are being called on to remove the structural causes of the excessively high unemployment. We can only hope that the introduction of the euro will spur the implementation of structural reforms.
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