mr duisenberg focuses on maintaining price stability in the euro area speech by mr willem duisenberg, president of the european central bank, at the swiss banking congress in zurich on 10 september 1999. * * * ladies and gentlemen, i was only too pleased to accept your invitation to this place of price stability between lake constance and the dufourspitze, to report to you on the first experiences with the euro. no other country in europe can rival the success of switzerland in combating inflation, and this is something of which you can be very proud. with the introduction of the single currency in europe, european integration has scaled new heights. since the beginning of this year, the governing council of the ecb has been responsible for the stability of the euro. monetary union means that for the whole of the euro area there is only one single monetary policy. the aim of this policy is to achieve price stability in the euro area as a whole. this means that there can no longer be a monetary policy designed to meet the needs of individual member states. therefore, it will be more important than ever for individual member states to push on determinedly with fiscal consolidation and to carry out structural reforms with the aim of enhancing the flexibility of the commodity and employment markets and improving the incentives for the creation and taking - up of employment. the governing council of the ecb determines the single monetary policy centrally. the governing council consists of the executive board of the ecb and the governors of the central banks in the euro area. monetary policy decisions are implemented by the eurosystem, which comprises the ecb and the national central banks of the 11 participating eu member states. the national central banks are, above all, entrusted with the decentralised implementation of the single monetary policy and the relevant activities in their countries. first, i should like to say that the launch and the first few months of the common currency have, in our view, gone well. the initial experiences with the euro and the single monetary policy have proved to be both positive and encouraging. we have currently achieved price stability and the prospects look good for this to remain the case in the years to come. the governing council of the ecb has become a truly supranational body. the members of the governing council clearly see themselves as committed to this joint cause. they take the whole euro area into consideration when discussing and taking decisions on monetary policy. the efforts made prior to and at the time of the changeover weekend at the

the so - called convergence criteria which concerned inflation rates, budget deficits, government debt ratios, exchange rates and interest rates. member states were expected to make further efforts so as to ensure a smooth transition to stage three. for example, they had to amend national laws so as to make them compatible with the treaty and to make their ncbs fully independent before the start of stage three. in 1995, three new member states - austria, finland and sweden - joined the european union. finally, on 1 january 1999, the european union reached a new and unprecedented stage of economic integration. with the launch of the euro, 11 countries gave up their monetary sovereignty and transferred the task of conducting the single monetary policy to a supranational institution. this historic step marked the culmination of a long period of successful preparatory work, the magnitude of which can hardly be overestimated. as a result of these efforts, the introduction of the euro took place in an environment of price stability that only a few observers would have predicted some years ago. the start of monetary union proved to be a formidable undertaking. in spite of huge operational challenges, the changeover took place without any incidents affecting the orderly functioning of the monetary system, not least as a result of the successful preparatory work of the emi and, since mid - 1998, the eurosystem. the introduction of the euro had important implications for the international capital markets. this was due to the fact that a number of the currencies replaced by the euro had played an important international role in the past. it also holds true because the euro has become the currency of an economic area which roughly equals the united states in terms of economic size and external trade, and which has the world ’ s second largest capital market. first experience gained with the euro let me describe the first experience gained with the euro from the ecb ’ s point of view. the eurosystem ’ s monetary policy strategy provides financial markets and the public with an important framework on the basis of which monetary policy decisions can be explained in a consistent and predictable manner. in our view, the monetary policy strategy has passed its first tests successfully. at the core of the strategy is a clear primary objective for price stability. a clear definition for the overriding objective of maintaining price stability in the euro area contributes to stabilising market expectations. the eurosystem defines price stability as a year - on - year increase of below 2 % in the harmonised index of consumer prices ( hi