Following their accession to the EU, the new Member States will also – in a second step – become members of the exchange rate system ERM II and – in a third step, if and when the Maastricht convergence criteria are met – adopt the euro. In view of the implications for its own tasks and objectives and of the advisory role it can play, it is only natural that the Eurosystem will become more involved in this process. The Eurosystem should be involved in all issues falling within its exclusive or shared areas of competence: monetary policy, exchange rate policy, foreign reserve management, payment systems, financial stability and the impact of enlargement on the Eurosystem itself. The Eurosystem is currently in the process of defining its position. Let me briefly outline some preliminary observations. The Eurosystem needs to have a positive attitude towards the prospects for an enlargement of the EU. This also applies to subsequent participation in ERM II and the eventual adoption of the euro. The Eurosystem should be prepared to advise these countries in pursuing appropriate structural reforms and stability-oriented policies in line with accession and convergence criteria. The Eurosystem should stand ready to provide technical assistance to accession countries, in particular to their central banks. Equal treatment should be a key feature of the accession process. Objective and uniform criteria should apply both to the countries’ accession and to their participation in ERM II and adoption of the euro.

Against this background, the predominant view has emerged that the best and most lasting contribution that monetary policy can make to long-term economic welfare is that of safeguarding price stability. Therefore, central banks throughout the world have been moving towards adopting long-term price stability as their primary goal. In order to achieve this goal most successfully, independence from political interference and a clear legal mandate for price stability are of the utmost importance. A lack of independence and an ambiguous mandate can easily force central banks to focus on the short term, and thus to fail to adopt the forward-looking, medium-term orientation that is crucial for a successful monetary strategy. These aspects were taken into consideration by policymakers when drafting the Maastricht Treaty. The mandate to maintain price stability cannot be seen in isolation. The Treaty assigns other tasks to the Eurosystem. Article 105 requires that the Eurosystem “without prejudice to the objective of price stability … shall support the general economic policies in the Community, with a view to contributing to the achievement of the objectives of the Community.” These Community objectives include “sustainable and non-inflationary growth” and “a high level of employment”. But, given the qualification “without prejudice”, the Treaty also clearly states how the Eurosystem shall set its priorities. A contribution to the achievement of the other objectives of the European Community can only be made if the Eurosystem’s primary objective is not compromised. However, there is ultimately no incompatibility between maintaining price stability and pursuing these other objectives at Community level.