to be considerable. greater investment in equities would increase the return on retirement savings. over the long run the rate of return on equities has been substantially higher than that on bonds and well above the nominal rate of growth in gdp ; it has been far higher on average than that on accumulated severance pay. hitherto, the accumulation of severance pay has represented a form of precautionary saving for workers, offering a modest but certain return, which in the event of loss of employment supplemented the often scant protection provided by the welfare system. ways must be found to guarantee workers adequate flexibility in the use of the accumulated resources and an appropriate limitation of risk. as for firms, contributions relief such as that which has been announced would amply compensate for the loss of a source of finance at less than market rates. the development of supplementary pension schemes requires that full competition be promoted between all financial institutions and that workers be guaranteed full freedom of choice. suitable fund size and greater transparency of terms and conditions must contribute to containing costs. at the same time, it is necessary to give workers clear information about the public pension that they will receive in the future. according to the bank of italy ’ s survey of household income and wealth, one third of the persons in employment are unable to judge whether their pension will be adequate. the experience of other countries suggests that the expansion of pension funds is also crucial for the development of intermediaries specialized in fostering the growth of small, innovative firms. between 2000 and 2003 pension funds in the united states accounted for 42 per cent of the financial flows of venture capital firms, compared with 20 per cent in the euro area and 3 per cent in italy. a deep and efficient stock market enables private - equity investors to dispose of their shareholdings by means of stock exchange listings, a method of disinvestment that makes the valuation process transparent while also offering entrepreneurs greater protection against the risk of losing control. the growth of specialized intermediaries, the greater involvement of institutional investors and the strengthening of the stock market are mutually reinforcing. more widespread use of investment funds would permit greater diversification of the risks in households ’ portfolios and improve the functioning of the financial markets. the competitiveness of italian funds is affected by tax disadvantages by comparison with foreign operators ; it is in the interest of the development of the italian financial industry that they be eliminated. the bank of italy will simplify the supervisory rules. the timetable for the launch

dr. duisenberg assesses the future importance of the euro address by the president of the netherlands bank and of the bank for international settlements, dr. w. f. duisenberg, on the occasion of a dinner hosted by the board of directors of the ‘ association for the monetary union of europe ’ ( amue ), at kasteel de wittenburg, wassenaar, 4 / 3 / 97. 1 it is a great pleasure for me to be able to address you here tonight in wassenaar. your association has always been among the strongest supporters for speeding up european integration, particularly economic and monetary union ( emu ). this emphatic support gives the speaker the luxurious feeling of playing before a home audience. 2 tonight, i would like to ponder two issues related to the future importance of the euro. first, what are the chances of the euro becoming an important reserve and invoicing currency? second, how should the european central bank deal with the external value of the euro? future role of the euro as a reserve and invoicing currency 3 i know that the first issue - the future role of the euro as a reserve and invoicing currency - has been receiving a lot of attention from your association over the years. as a matter of fact, you very strongly believe in a powerful role for the euro. i quote from your latest report : “ by placing europe in a much stronger position vis - a - vis the united states of america and other countries, the introduction of the euro improves investor climate and ultimately favours employment. also, the use of the euro will rapidly develop world - wide, in proportion to the external trade of the european union which already ranks first in the world ”. i very much welcome this positive approach to the euro. the internationalization of the euro is only partly in the hands of european policy - makers. policy - makers can provide for the right incentives by pursuing sound policies, thereby making their currency attractive. but, at the same time, the success of the euro is also in the hands of the markets. in this respect, i would encourage the european business community to take every opportunity to promote the private use of the euro and increase its role as a vehicle currency and store of value. 4 let me elaborate a little by discussing three major factors that will determine the future importance of the euro : the stability of the euro, the amount of trade conducted in it, and the depth of euro financial markets. safeguard