mr garganas gives a speech on integrating greece into the euro area and the challenges ahead speech given by mr nicholas c garganas, deputy governor of the bank of greece, at the “ athens summit 1999 ” on 18 september 1999. * * * the adoption of the euro as a common currency by a first group of eleven european union member states on 1 january 1999 was rightly described as an historic event since the move to the final stage of economic and monetary union indeed marks a decisive step towards full economic and political integration between the countries participating in this endeavour. the vigorous and credible implementation by greece of policies aimed at achieving a high degree of sustainable economic convergence and meeting the terms of the maastricht treaty for emu participation have yielded concrete results, thus placing greece directly on the road to joining the euro area by the target date of 1 january 2001. over the past few years, convergence towards price stability has been impressive. the annual rate of inflation in august was 2 %. great progress has also been achieved regarding the general government budgetary position. in 1998, the deficit stood at 2. 5 % of gdp, and is expected to fall further ( to just over 1. 5 % ) this year, continuing the downward path of the debt – to – gdp ratio, which currently stands at 105 %. the gradual reduction in budget deficits, together with the entry of the drachma into the exchange rate mechanism, has led to an appreciation of the drachma ( first against the ecu and this year against the euro ), and lower long - term interest rates. in the first half of this month, the ten - year government bond spread versus germany was around 163 basis points, compared with 196 basis points in march 1999 and 425 basis points in september 1998. the remarkable nominal convergence achieved by greece indicates that its objective of meeting the maastricht criteria by early 2000 is now becoming a reality. although it is widely anticipated that greece will be admitted into the euro area by june next year so that it can adopt the single currency on 1 january 2001, we should not allow this achievement to dim our view of what remains to be done. as i see it, greece faces two broad sets of challenges. first, in the remainder of 1999 and in 2000, macroeconomic policy has to remain firmly focused on keeping the emu process on track and on securing the conditions that will make for a smooth transition and positive performance upon entry. from this point of view, the main

owners on a quarterly basis. norges bank works to safeguard financial wealth over time. responsible investment is a key component of that task. the bank uses a number of instruments to promote active ownership, such as international principles and standards, expectations documents, voting at shareholder meetings and contact with companies. corporate governance and environmental and social considerations are integrated into the investment process and risk management. in a number of cases, the bank has sold off or refrained from buying securities as a result of concerns regarding longterm sustainability. our experience is that there are positive synergy effects between active ownership and other aspects of investment activity. it is the political authorities that lay down the criteria for exclusion of individual companies from the investment universe. the government is now proposing that the responsibility for deciding exclusion should be delegated to norges bank. an integration of instruments could bis central bankers ’ speeches strengthen the effectiveness of active ownership. it would make it easier for companies to relate to a single representative of the gpfg, which may also enhance consistency and predictability in its performance of active ownership. norges bank aims to expand reporting on responsible investment practices. we are well prepared to take on a wider responsibility within a clearly defined framework. norges bank must then have a sufficient degree of freedom to organise and carry out its investment management task as effectively as possible. the overriding objective of investment management must remain the highest possible return within acceptable risk levels with a view to safeguarding and building wealth for future generations. thank you for your attention. bis central bankers ’ speeches