use that extra push. that would be the keynesian argument : the more you spend, the more you activate the economy. but besides that argument, there is what economists call the “ ricardian effect ’ ’. david ricardo rightly stated that the greater the deficit becomes, the more investors and consumers alike start to realise that such a deficit is not sustainable in the longer run. somebody will have to pay for it, either through higher market interest rates or through tax increases. entrepreneurs become nervous and slow down their investments, consumers start saving more and spending less. so the economy slows down and jobs are lost. the more the budget goes into the red, the stronger this ricardian effect becomes, and the more it outweighs the keynesian arguments for deficit spending. that is why the stability pact is also a growth pact. slovenia is the only new eu member state that is ready for the euro. do you think it can join in 2007 as expected? we will see. i don ’ t want to anticipate the result of the reports that the ecb and the commission will publish in may. we have to check whether the criteria stipulated in the maastricht treaty are fulfilled on a sustainable basis. after seven years, do you have any arguments left to convince the british to join the euro? it is up to the british people to decide. as you know, in the past, the british prime minister said very clearly that it is in the interest of britain to join when the time comes. i ’ m also convinced of this. when you compare britain and ireland, you can see that there are good arguments. however, even without the uk, we number 313 million people in the euro area. with otmar issing ’ s departure, the last pioneer of the first ecb - management is leaving. what has been done in your institution in the last eight years and what challenges lie ahead of you? otmar issing has been and is a marvellous member of the executive board. our institution, the ecb, has been designed to be credible over time irrespective of staff changes. the ecb is credible according to all the information we extract from observers, market participants and the financial sphere. the successive members of the executive board are themselves part of the continuity of the institution. i am confident that this trust is solidly based. do you think lucas papademos would be a marvellous successor to otmar issing as chief economist

mr duisenberg focuses on the possible future impact of the unique monetary unification in the european union and shares some observations on the challenges facing the ecb and the eu speech given by mr willem duisenberg, president of the european central bank, at the villa d ’ este workshop in cernobbio on 4 september 1999. * * * ladies and gentlemen, a great number of you are clearly familiar with the political and economic developments which led to the introduction of our new currency, the euro. i should therefore like to look ahead and focus my remarks on the possible future impact of this unique monetary unification and share with you some observations on the challenges facing the european central bank and the european union as a whole. since 1 january 1999, the euro has been the common currency for eleven member states of the european union. this was rightly described as a historic event, since the completion of economic and monetary union indeed marks an unprecedented degree of economic and political integration among the european countries participating in this endeavour. i am sure that the introduction of the single currency will help to further realise the efficiency and welfare gains of the single market, although this will probably be a gradual process, and will become apparent only over time. however, with the establishment of economic and monetary union, the integration process has certainly gained a new quality. the significance of the complete and voluntary transfer of a core competency of the modern state, namely monetary policy, from the member states to a truly european and independent institution such as the european central bank, can hardly be overestimated. while the years of technical preparation certainly required great efforts on the part of all involved, it is the longer - term impact of emu which holds the prospect of the most momentous change. the first few months of the existence of the euro have set the scene for a positive outlook. even though external developments such as the depreciation of the euro against the dollar have attracted rather pessimistic headlines, there are, in fact, several reasons for some satisfaction. the changeover to the single currency ran smoothly, largely thanks to the diligent preparation of all involved. the european central bank and the eurosystem have assumed their new responsibilities, and the monetary policy instruments and decision - making procedures are functioning well. a unified euro area financial market is developing as operators re - orient their activities beyond the borders of their previous domestic markets. however, it is altogether natural that not all facets of the complex emu project are as yet