lucas papademos : the completion of the changeover to the euro speech by mr lucas papademos, governor of the bank of greece, at the euro information conference, athens, 17 october 2001. * * * i would like to welcome you to the third session of the euro information conference. your presence here attests to the importance you attach to the successful changeover to the euro, our new currency, our money. it is a particularly great pleasure for me to welcome the minister of national economy and finance, mr yannos papantoniou, and the president of the european central bank, dr willem duisenberg, to whom i express my warmest thanks for their participation. i would also like to thank the other distinguished speakers and colleagues who participated in the first two sessions of the conference. i we have now reached the last lap in what has been a long and arduous journey culminating in the introduction of the single european currency. about 75 days from today, the euro banknotes and coins will be put into circulation and the withdrawal of the national currencies of the 12 euro area countries will begin. the euro will thus become a visible and tangible reality for some 300 million european citizens and numerous other economic agents worldwide. in the current juncture of increased uncertainty about international developments and economic prospects, the interest of the public in the introduction of euro banknotes and coins may reasonably have been reduced. this does not mean, however, that the completion of the changeover to the euro does not constitute a high priority for us all. and it is of particular importance, especially in a period of uncertainty, to prepare ourselves in time and adequately, so that the changeover to the single currency is smooth and successful. creating monetary union in europe and introducing the euro has indeed been a long, complex and unprecedented process. this vision first took shape over 35 years ago. the official political decision and commitment of the eu member states came nearly ten years ago, with the signing of the maastricht treaty on 7th february 1992. a long period of extensive preparations followed to ensure that the appropriate economic and monetary conditions were established and to complete the necessary institutional and technical adjustments for the establishment of economic and monetary union in europe. the euro came into being as a currency in scriptural form in eleven eu countries on 1st january 1999. after joining emu, greece also adopted the euro as its currency on 1st january 2001. the introduction of the euro in scriptural form was a particularly difficult

long term. on the other hand, inflation expectations one and two years ahead have increased significantly over the last 12 months. however, this is largely a consequence of an increase in the actual measured rate of inflation ( see figure 10 ). a matter of some concern ahead of the wage bargaining rounds may be that wage expectations also largely seem to be a consequence of the actual measured rate of inflation. i shall return to this shortly. in light of this economic development, monetary policy has been aimed at successively increasing the repo rate towards a more normal level after the extremely low level it reached during the crisis. in april, we raised the repo rate by 0. 25 percentage points for the sixth time in a row, to 1. 75 per cent. our assessment was that there is a need to continue to raise the repo rate in order to stabilise inflation at a level close to the inflation target of 2 per cent and to avoid too high a level of resource utilisation in the future ( see figure 11 ). however, as usual, we would like to add that uncertainty concerning the future is great and the interest rate path we have calculated is a forecast, not a promise. wage formation will probably continue to work well in the years ahead the conditions are good for wage formation to continue to work well in the years ahead, just as it has since the mid - 1990s. this is also the assumption made in the riksbank ’ s forecasts from april. the rapid improvement of the labour market means that the central agreements concluded in the autumn and next year are expected to reach higher levels than the agreements concluded last year. wage increases over and above the central agreements ( “ wage drift ” ) are also expected to contribute towards slightly faster wage increases. the riksbank ’ s assessment is that overall hourly wages will increase by about 3. 5 per cent per year in 2012 – 2013, which is compatible with a cpif inflation rate ( inflation excluding interest rate changes ) of close to 2 per cent at the end of the forecast period. 3 but all forecasts are uncertain. this also applies to wage forecasts. it is normally easier to make good forecasts for the development of wages than it is for inflation. this is probably partially because, over time, there are smaller variations in wage growth than there are in inflation, and partially because wage agreements provide important information on future see j. johansson, s. palmqvist and c. selander, “ the cpi will increase more