, acting as a catalyst for trade. finally, with regard to labour markets, the wage formation process shows signs of increased flexibility and labour market reforms are starting to go in the right direction. overall, the single currency contributes forcefully to more integration and competition, acting as a powerful driver for the further enhancement of the single market and creating an environment which – i am sure – schumpeter would have enjoyed. thank you very much for your attention.

it is important that reforms in network industries are accompanied by an appropriate regulatory framework which ensures non - discriminatory access to the bottleneck infrastructure and more generally, a " level playing field " for all market participants. the quality of the regulatory framework has a considerable impact on the extent to which potential price falls due to structural reforms in network industries will be achieved. another instrument available to reduce distortions to competition is state aid policy. state aid subsidies weaken the incentives for companies to improve their efficiency, enabling the less efficient to survive at the expense of the more efficient. although there are still substantial differences between euro area countries, the overall trend is towards a reduction in state aid levels. another positive development is that the transparency of state aid policies has improved as a result of the publication of a new state aid register and a state aid scoreboard by the european commission. the impact of the euro on these processes, which has led to more competition, cannot be overestimated and goes far beyond the mere abolition of intra - european exchange rates and the introduction of common notes and coins. the single currency opens up the euro area product markets further and will be a major impetus to competition and integration by increasing the transparency of prices across borders. investment will also benefit as euro area companies no longer have to insure against exchange rate movements within the euro area and there are indeed indications that direct investment into the euro area has strongly increased since the start of emu. overall, the euro will give new impetus to the initiatives taken in the 1980s to establish a truly integrated internal market. labour markets progress with labour market reforms has become evident from the increase in employment - intensive growth in the euro area. it is very interesting to note that job creation has held up reasonably well over recent years. during the first three years of emu, some 6 million jobs have been created in the euro area versus 3. 5 million in the us. the unemployment rate in the euro area has declined from almost 11 % in 1997 to slightly more than 8 % in 2001 ( which is still too high ). on the supply side, the employment rate, particularly in the case of women, has increased considerably, along with the proportion of part - time jobs and temporary contracts in total employment. euro area average participation rates are, nevertheless, still below those of the us or the scandinavian countries. the explanations for this job - rich growth lie in structural changes in the labour market and wage moderation. government policies have generally improved labour market performance in euro