Reden und Präsentationen

Es gilt das gesprochene Wort.

Ladies and Gentlemen,

It is a great pleasure and honour for me to open this conference together with Karl-Heinz Grasser, Austria’s Minister of Finance, and Christoph Leitl, President of the Austrian Federal Economic Chamber. The participation of numerous outstanding policymakers, bankers and academics at this conference is proof that the topic – experience with the euro – is highly appreciated and I really do want to thank them all very much.

More than seven years after the introduction of the euro, and in the light of the aspirations of several EU Member States to join the euro area in the not too distant future, this conference provides a welcome opportunity to assess the performance of the euro and to evaluate the challenges ahead. Let me start with a short review of what we have achieved and then outline what remains to be done:

Since January 1999 the euro has gained international importance and belongs to the most traded currencies, together with the US dollar. The euro has been well received in trade and financial markets and has asserted itself as an important official reserve currency and as an anchor in exchange rate regimes in many non-euro area countries.

Increased price transparency, lower interest rates and transaction costs, price stability and credibility are the manifold benefits of the euro. I would, however, like to stress one specific aspect of monetary integration that has proved most relevant for the success of the euro area: The irrevocable fixing of exchange rates has eliminated harmful intra-European exchange rate tensions and has protected the euro area well from negative external shocks.

Indeed, without the euro, major global developments in recent years, like the bursting of the equity bubble, the repercussions of the terrorist attacks and global exchange rate fluctuations, might have led to phases of instability within the European economy. 

Yet, the euro area provided a stable framework for weathering these turbulences. The high expectations in the euro have been fulfilled!

Turning to monetary policy, the independence of the Eurosystem and its primary objective of maintaining price stability over the medium term have truly become a global standard. Price stability is a precondition for sustainable economic growth and rising employment. The aim of the ECB to keep inflation rates close to, but below 2% over the medium term is not only widely accepted, but its price stability track record has maintained credibility, as confirmed by low and firmly anchored inflation expectations. Moreover, monetary policy with very low interest rates has been supporting economic activity and employment. The public can be assured that the ECB’s Governing Council remains firmly committed to delivering on its mandate of maintaining price stability.

On the fiscal policy front, the track record of the euro area is rather mixed. However, sound fiscal policies and a monetary policy geared to price stability are fundamental for the success of our monetary union. They are prerequisites for macroeconomic stability, growth and cohesion in the euro area. Hence, it is imperative that the revised Stability and Growth Pact is implemented in a rigorous and consistent manner.

A very essential challenge that the euro area faces is low potential growth. Business activity in the euro area over the last few years has averaged levels which have brought down unemployment rates only in small steps to some 8.2% in the euro area recently – by comparison, unemployment runs at 5.0% in Austria.

To make our economies more dynamic, a proactive, forward looking approach based on a fair measure of   self-confidence and optimism is necessary. We have to provide a framework in which competitive enterprises and a qualified labour force can prosper and create wealth. Hence, the implementation of structural reforms in the euro area has to be continued, and in some countries it has to be stepped up.

Such reforms should aim at strengthening competitiveness, promoting R&D and advancing deregulation. For instance, tax-, pension- and benefit system reforms must provide strong incentives for active participation in the labor force, e.g. by making participation in the work process actually pay off. Health reforms should aim at advancing the efficiency and quality of health services. Administrative reforms have to improve cost efficiency and cut red tape, while at the same time providing a good service level. Education policy must aim at supporting our research institutions and businesses to attain top positions in their field. Our efforts are not directed towards wage competition – this is a battle we cannot win – but at providing competitive products and services. 

The recent challenges of integrating new Member States as well as globalization have raised the level of urgency in the euro area for adapting its structures to boost competitiveness. At the end of the day, only dynamic economies can sustain modernized, but still generous welfare systems in Europe.

Let me remind you that the monetary integration in Europe is scheduled to proceed in three stages: In the first stage, countries join the EU. In the second stage, the new Member States participate in the exchange rate mechanism ERM II for at least two years without severe tensions. Finally, after the sustainable fulfillment of the convergence criteria, they adopt the euro in the third stage. However, speed must not compromise quality!

In the runup to the third stage, these countries’ fulfillment of the convergence criteria is assessed, and as I am speaking, we are waiting for the European Commission’s and the ECB’s convergence reports on Slovenia and Lithuania, which are scheduled for release just next week. Hence, I will refrain from discussing issues related to these reports or the pending decisions of the competent bodies of the European Union at this point in time.

Regardless of how slowly or quickly the new Member States pass through the three stages, ultimately they will introduce the euro. This conference provides a timely opportunity to discuss what these countries can learn from the changeover experience of the countries in the euro area today.

Of course, the situation today is not entirely comparable with the conditions prevailing in what we might call the the “pioneering years” of the euro. However, what certainly continues to apply, today and in the future, is that the stability of the euro must be underpinned by sound macroeconomic and structural policies. The most obvious difference between then and now is that the euro is already in circulation, which probably simplifies information campaigns and cash changeover logistics to a certain extent, as there is already practical experience available.

Furthermore, the new Member States are characterized by different degrees of banking intermediation, different payment habits and varying degrees of “de facto euroization”. All these factors may influence both the amount of frontloading required and the changeover process. In addition, the institutional framework will drastically shorten the changeover period. This makes it even more important for the countries that are euro adoption frontrunners to start changeover preparations early.

Experts at the Oesterreichische Nationalbank are already studying the potential impact on our cash management of euro area membership of all of our neighbours. These studies see Austria as one of the euro area centres for cash flows and banknote migration. As the euro is the most important foreign currency in the euro area neighbouring countries, the management of cash distribution will become more complex.

Against this background, the OeNB, for instance, is evaluating alternatives¹) to the current concept of cross border cash supply. The unique geographic proximity of five capitals – Bratislava, Budapest, Ljubljana, Prague and Vienna – implies specific challenges for the Oesterreichische Nationalbank, and these provide a welcome opportunity for close cooperation between Austria and its neighbours. It goes without saying that the requirements of the stakeholders – especially the general public and the retail sector as well as the commercial banks and the cash transport organisations – must be met, and cash supply must be efficient. We at the OeNB have identified the changing environment and have begun preparations to cope with the challenges of the euro area enlargement.

Over the next two days, this conference will cover several of the aspects I mentioned and many more. It will provide ample opportunities for fruitful exchanges, discussions, networking, and the gathering of information related to experience with and preparations for theeuro. I hope that all this may initiate and deepen cooperation amongst participants and that the conference will contribute to our understanding of the euro. I wish you all many insights at this high level conference!

Thank you very much for your attention.