mr. gaddum discusses the euro, us dollar and the world economy dinner speech by the deputy governor of the deutsche bundesbank, mr. johann wilhelm gaddum, on the occasion of the joint conference of konrad - adenauer - stiftung and aspen - institut, berlin in washington dc on 6 - 8 / 5 / 1998. there is no doubt about it. the european central bank will come into operation on july 1. that also means that the euro is on its way, and that will bring about changes in europe. but is it only europe that will be affected? i very much appreciate having this opportunity to explain the views of the deutsche bundesbank on this matter to such a well - informed audience here in washington. recently, in a well - known us newspaper, i saw a cartoon which captured what - to my mind - is the widespread ambivalence concerning the future prospects of the euro. the cartoon showed a group of experts ( presumably economists ) sitting at a round table and apparently discussing the future outlook for the euro. the chairman of this group finally gets carried away and exclaims : “ i bet you 10 to 1 that the euro will be a success! ” each of the others at the table nods vigorously in agreement with this forecast, replying : “ i think so, too. ” only one of the group adds somewhat timidly : “ but in dollars. ” begun as a foreign policy concept, the idea of european monetary union ( emu ) has taken on economic significance during the past few years as a result of the globalisation of the markets. so far, there has been little discussion of this international dimension of emu. emu will create a currency area which, when all 15 states of the european union have become members, will have a population of approximately 370 million whose gross domestic product will represent about 38. 3 % of the gdp of all oecd states. this will change the respective importance of the world ’ s currencies. it therefore seems reasonable to suppose that, when stating what we expect of monetary union, we have to explain, firstly, what the european central bank will mean for europe and particularly for germany and, secondly, what it may mean for our friends and partners in other parts of the world. ii konrad adenauer always incorporated the idea of european cooperation into german policy, and since then - yes, right up to the present day - this has been a central feature of german policy.

the member states of the eu acts in its own right ; whenever central banks are concerned, the ecb acts as the european central bank. [UNK] i admit that this is a complicated arrangement. no easy answer has yet been found. what is necessary in the interest of the international monetary system is a clear declaration of belief in an open world economy which does not attempt to support hegemonies through hidden regulations. surveillance and rules, however carefully they are fomulated, are no substitute for the self - imposed sense of responsibility of the market players themselves. instead, a promising approach may be to refrain, when attempting to reform, from giving the imf a never ending series of new tasks to perform but to restore the role of the imf to its original function, namely that of a catalyst. vi i hope that during the next two days this conference will provide you with many opportunities to take part in interesting discussions which will afford you additional information and new material for coming to your own conclusions. when you leave washington again at the weekend, you should be in no doubt - if i may return to the cartoon i mentioned at the beginning - at least about the currency you use when making a bet. [UNK]