mr schieber looks at the significance of the euro for germany and the bundesbank speech by mr helmut schieber, a member of the board of the deutsche bundesbank, at the euro - forum hosted by the club de banqueros, mexico, on 10 march 1999. - ithe entry of eleven countries into stage three of european monetary union on january 1, 1999 has introduced a new era of monetary policy in europe. germany is one of the initial participants and has, since the beginning of the year, subordinated itself – abdicating a sovereign right in the process – to the single monetary policy of a supranational central bank. in the following, i will look at the opportunities as well as the problems and risks of monetary union from the german point of view, and especially from the point of view of the bundesbank. - ii the decision to participate in european monetary union was especially difficult for germany. on the one hand, the european unification process has had germany ’ s broad political support since the end of world war ii. the integration successes achieved in europe since the 1950s were mainly in the economic sector. from the development of the european coal and steel community in 1951 to the founding of the european economic community and the creation of the single market to the establishment of the european monetary system and the signing of the maastricht treaty, germany has always been a motor of european union. on the other hand, germany found it very difficult to part with the deutsche mark. the deutsche mark was a symbol of the “ economic miracle ” of the post - war era and of germany ’ s self - image as a nation. germany ’ s increasing importance in europe and the world is reflected in particular by the ascent of the deutsche mark to the second most important international reserve, transaction and investment currency after the us dollar. this explains the particularly critical dialogue among politicians, in public as well as in business and finance in germany, concerning the path to emu laid down by the ec treaty. the debate centred around concerns that monetary stability would be jeopardised. stability ranks extremely high in germany ’ s order of priorities, with hyperinflation having wiped out the currency twice this century, followed by currency reforms and their horrible political, social and economic consequences. against this background, the debate on economic and fiscal convergence and the group of participating countries was especially heated in germany. - iii now, a good two months after the changeover to the euro

, initial experience with the new currency in the international financial markets can be evaluated. the changeover to stage three of emu, which posed an extraordinary technical and operational challenge to all financial market participants, was an unqualified success. despite the technically complex task at hand, there were no serious malfunctions. much to the relief of the financial market participants, the convergence of interest and exchange rates took place even before the euro was launched. the speculative attacks against the euro which many people were afraid would happen did not come to pass. the money market rates converged towards the low level of the core countries, which was set by means of the coordinated interest rate reduction by the central banks of the eurosystem in december 1998. all in all, the smooth transition from the national currencies to the euro can be regarded as a sign of the high quality of the preparations made by the central banks and the private financial market participants – and as public recognition of the hitherto successful convergence process of the partner countries. - iv confidence in the role and the work of the ecb is rising within the german population. the decision to locate the european central bank in frankfurt and the composition of the governing council with wim duisenberg as president stand for a tradition of stabilityoriented monetary policy. after all, the institutional regulatory system of the eurosystem was modelled on that of the bundesbank. the establishment of an independent european system of central banks unmistakably dedicated to the goal of price stability was of the utmost importance for german residents and politicians. like the bundesbank act, the maastricht treaty only envisages supporting the general economic policy of member states provided this does not prejudice the objective of price stability. the governing council of the ecb has thoroughly discussed its monetary policy approach and subsequently presented and explained the results in detail to the public. the ecb has made it plain that – in line with its mandate – it shall pursue neither an exchange - rate - oriented monetary policy nor an anticyclical monetary policy. exchange rates and the business cycle will certainly be carefully observed, analysed and taken into consideration in the decisionmaking process, but they do not determine the general orientation of the ecb ’ s monetary policy. rather, monetary stability as the primary goal of the ecb shall be ensured by regulating the growth of the money stock, with the aid of interest rate policy, in a way that, on the one hand, enables