of all its citizens. it would also enhance the confidence of economic agents over shorter horizons. all parties involved must strive to convince the public at large that everybody would benefit from such reforms - in terms of growth, more and better jobs, and higher incomes. the euro after five years it is now five years since the start of stage three of economic and monetary union and two years since the introduction of the euro banknotes and coins, and i would like to make a few remarks on the benefits the single currency has had for our economies and our citizens. first of all, i am proud to say that, in accordance with the mandate set out in the maastricht treaty, the ecb has, despite substantial adverse price shocks, successfully kept inflation and inflation expectations at low levels by historical standards. the single monetary policy and its clear focus on the maintenance of price stability have helped to anchor inflation expectations in the euro area over the medium and long term. this has facilitated a reduction of inflation uncertainty and the associated risk premia. as a result, market interest rates have remained historically low and our citizens, our companies and the euro area as a whole now enjoy financing conditions which are very favourable by historical standards. this is a key factor for growth and job creation. we should not forget that prior to the euro, there were significant differences in long - term interest rate levels across countries. it was a remarkable achievement that the creation of a credible monetary union allowed market interest rates to converge towards the levels of the legacy currencies inspiring the maximum level of confidence and therefore having the lowest market interest rates, and not just to the average level. this very significantly improved the financing conditions in a large part of the euro area which previously had much higher market interest rates, and this is a success of the euro which is often underestimated. second, let me remind you that by adopting the single currency, euro area countries also eliminated their exposure to intra - euro area exchange rate volatility and risks. prior to the introduction of the euro, intra - euro area exchange rate developments were very significant sources of uncertainty for trade and investment. this uncertainty was in turn priced into high - risk premia on interest rate markets. these phenomena hampered investment, job creation and growth all over what is now the euro area. moreover, the macroeconomic implications of exchange rate developments vis - a - vis non - european currencies are now much less significant than they were prior to the introduction of the euro. this is

the riksbank will shortly be submitting an opinion on the calmfors report. the arguments for and against emu participation will be considered there at greater length. a general theme in the report is that every kind of decision - to joint now, to join later or to stay outside - entails risks and has a price. although the report conclude that sweden should wait joining emu for the time being, not much is needed to tip the scales the other way, for example if emu begins with more participants than the core countries or if the alternative of remaining outside does not confer any substantial freedom in monetary policy. but as i said, there will be occasion to return to this. preparatory work in the eu the preparatory work is in full swing in all the eu institutions as well as in the member states. the emu project will not founder on technical aspects. in may 1995 the commission presented a green paper on the practical arrangements for a changeover to the single currency. at the madrid meeting that year the european council adopted the scenario for the changeover, specifying dates for the central decisions. the council confirmed that stage three of emu is to start on 1st january 1999. the decision on which countries will participate in the euro area is to be made as early as possible in 1998 ( probably february - - april ) on the basis of which countries fulfil the convergence criteria in respect of statistics for 1997. euro banknotes and coins are to be in circulation by january 2002 at the latest. the preparatory work last year was dominated by two issues : one was what is now called the growth and stability pact and the other was the nature of the relationship between the euro and the currencies outside the euro area. a common factor in these matters is the question of maintaining stability once emu has been established. 1. growth and stability pact without specific restrictions, participation in the euro area would make it easier for a country to implement an expansionary budget policy. when national currencies disappear and the interest rate largely reflects the single monetary policy, some of the immediate signals to politicians and other decision - makers will disappear. access to the large, uniform capital market that will result from emu will also make it easier to borrow. up to a point, of course, this is good ; it eases the tax burden in countries with a large government debt, for example. but it also involves risks, above all that a country abuses the situation so that ultimately it is other