in participating countries reduce employment opportunities and real income, and they undermine the sustainability of the social security system. it is therefore widely recognised that structural reforms in capital, labour and product markets are needed to improve the prospects of the euro area. in this respect, the ecb very much welcomes and supports the impetus given by the lisbon european council to the economic reform process. structural reforms that are designed to increase the flexibility of markets permit a higher level of sustainable long - run growth and employment. they furthermore enhance the capacity of the participating countries to cushion macroeconomic shocks. the more rigid labour, product and financial markets are, the higher will be employment and income losses experienced in response to changing domestic and global economic conditions. this is due to the fact that prices and wages cannot adjust suitably and in a timely manner. conversely, the speedier adjustments of wages and prices can take place in response to adverse changes in macroeconomic conditions, the lower will be the costs in terms of employment and output losses. as the central bank responsible for the euro area, we place great value on seeing a major necessary condition for growth, job creation and prosperity for current and future generations being fulfilled : ensuring price stability, confidence in the euro and its purchasing power is our own decisive contribution to sustainable growth. and this contribution is less difficult to deliver in an environment where governments and social partners - based on sound policies - contribute to confidence and potential output growth. there is no denying the fact that the implementation of structural reforms requires courage and leadership. especially, as they may temporarily have negative repercussions for some groups, namely those that profited from protective regulations or subsidies. for example, while regulatory reforms will ultimately result in broader choices and lower prices for consumers, they may imply some adverse short - run effects for formerly protected firms. this may, amongst other factors, be due to the inefficient use of resources in incumbent firms before the sector was opened up to competition. however, after some time, employment in the liberalised sector can be expected to increase, as new services are being introduced. most importantly, all other sectors which before had to finance the subsidies will immediately enjoy the benefits from the reform. these gains are often overlooked in the public debate. in fact, there is a formidable challenge to gain the support of parliaments and the public for implementing structural reforms. it is therefore imperative to make it clear to the public that, if governments and social partners deliver those reforms, the net benefits will be

jean - claude trichet : the euro - five years on speech by mr jean - claude trichet, president of the european central bank, at the annual dinner of the guild of international bankers, london, 2 february 2004. * * * ladies and gentlemen, for five years now, we have had a single currency and a monetary policy conducted by the eurosystem, consisting of the european central bank and the national central banks of the euro area. the introduction of the single european currency has been a historical landmark. the process of preparing for the adoption of the single currency had led to a degree of convergence in the 1990s that many had not thought possible. sceptics were unconvinced as to whether it was possible to establish the euro as a stable currency and to successfully formulate a monetary policy for a diverse currency area. in particular, some observers considered the continuing existence of autonomous national fiscal policies as incompatible with a supranational monetary policy. the “ one - size - fits - all ” approach implied by the single monetary policy was, on account of the diverse nature of the currency area, criticised to give rise to permanently asynchronous economic developments. critical observers therefore took the view that a stability - oriented monetary policy was doomed to failure. where do we stand five years later? the euro has been firmly and credibly established as a stable currency. the euro area has witnessed a period of low rates of inflation and low levels of long term interest rates. most countries have had their lowest market interest rates for decades. the introduction of the euro, first, in book - entry form, and, second, in the form of banknotes and coins went very smoothly. the euro has become part of people ’ s daily lives. the successful introduction of the euro the birth of the euro and the cash changeover in january 1999 the transition to the euro was virtually free of technical problems, although many people had predicted that such a big project would inevitably be delayed or affected by bugs. we established, almost overnight, a unified money market, which functioned smoothly from the very start. three years later, the exchange of the old national banknotes and coins of the 12 countries of the euro area for the new euro notes and coins was a huge organisational, logistical and technical undertaking. the euro cash changeover progressed well and rapidly, without any major hitches, to the benefit of more than 300 million european citizens. the mandate of the ecb equally important, the ec