virtually everywhere in the union – a trend to which i shall return later in my remarks. by fostering a long - due redressing of economic priorities and processes, the euro has helped rejuvenating some economies that had been written off as too ossified and self - complacent to successfully compete in a monetary union. we see signs that this restructuring is spreading to other parts of the union that have been less successful so far in taking up the challenge. well - designed institutions and a strong sense of shared responsibility are the foundations of good collective performance. so, our institutional framework and the inner workings of the eurosystem will be my principal theme. examples will include the successful transition to the euro, both at the outset of monetary union – our first operational challenge – and as part of an ongoing process of continental integration and inclusion which the european system of central bank has taken upon itself as a mission. i will then proceed to the impact that the euro is exercising on the deep economic structure of europe. finally, i will outline the ecb ’ s conduct of monetary policy through difficult and sometimes agitated events. the recent turbulences in global financial markets will offer the background against which our strategy can be recognised and understood. a strategy that reconciles flexibility of action and a firm, fundamental, concentration on our primary responsibilities. the ecb itself has very rapidly become a mature institution. collegial thinking in monetary policy deliberations has instilled a shared strategic view and common goals. the transformation was quick. almost instantly, the governing council of the ecb shaped into a truly collegial body, a “ team ”, rather than a collection of individuals. not only has this transformation preserved the governing council from the emergence of national biases. it also has inspired in its members a profound sense of common ownership of decisions. this has been decisive for the critical task of active representation that governors have : the task of expounding the rationale for our common policy course, and explaining our single monetary policy before the various national constituencies in their own languages. and i would like here to pay homage to my dear friend klaus liebscher, gouverneur of the oesterreichische nationalbank, who is a fantastic member of our monetary team and whose wisdom has been and is priceless in the governing council. interactions across staff at the escb level have also intensified virtually from day zero. in fulfilling our mandate we rely heavily on the close cooperation between ec

##b and ncb staff that meet regularly in various technical committees. the existence in the eurosystem of these technical bodies offers an important first platform in the way toward the achievement of shared decisions. for example, the monetary policy committee is in charge of the eurosystem staff macroeconomic projections, which represent an important input for the monetary policy deliberations of the governing council. the discussions that take place in this committee in preparation of the eurosystem staff macroeconomic projections provide a forum where differences of assessment across the ncbs can be identified and reconciled into a common picture at an early stage. more generally, the eurosystem ’ s culture of very close and intimate cooperation at all levels of staff in the context of committees, working groups and taskforces support decision making in the governing council. the successful transition to the euro cooperation and a sense of camaraderie were critical in preparing for our big - bang. in spite of the extraordinary operational hazards involved, the euro changeover in january 1999 passed without any incident affecting the orderly conditions of the monetary system. largevalue payment systems and billions of electronic records were adjusted to function in the new currency. at the same time, a new infrastructure for payments and securities settlement was launched. three years later, the euro became a tangible reality and the euro banknotes and coins became the legal tender for, at that time, more than 300 million citizens. the smooth introduction of the euro in 1999 and the success of the cash changeover in 2002 were the result of years of thorough preparatory work involving the ecb, the ncbs and a large number of public and private institutions which represent the core of the financial sector in the euro area. this has been reflected in the open and positive way in which the general public and financial markets have received the euro. no doubt the introduction of the euro and the realisation of stage three of european economic and monetary union ( emu ) was a milestone in the long and multifaceted process of european integration. a completely new monetary policy framework was introduced in europe, with the ecb conducting a single monetary policy for the entire euro area consisting of eleven and soon twelve countries. but despite the uncertainty surrounding the transition to the new regime, the ecb and the euro have been credible from day one. market interest rates at all maturities converged to the lowest – not the average – interest rates prevailing prior to the euro. this caught by surprise those observers who had long anticipated that the yield curve after