market by 2005. this political spin - off is not limited to the eu alone. for example, the european commission has recently opened discussions with switzerland, and other third countries, on banking secrecy and the fiscal treatment of savings. i understand that on the swiss side, this sensitive dossier has been linked to other fields of negotiations such as schengen and european immigration policy. it goes to show that even in third countries the impact of the euro surpasses the economic domain. clearly, the euro enables the “ e ” of emu to reach the critical mass necessary for progress in many policy areas. in that sense, a further deepening of financial markets will enhance labour mobility, for example through the portability of pensions and social security entitlements across borders. more importantly, there are signs that labour market flexibility has been improving. thus, the european labour force tends to absorb cyclical fluctuations more effectively. in a similar vein, wage negotiations appear to adjust faster to changing economic conditions, while inflation expectations have decreased. this change in behaviour is a reflection of the fact that in the euro - countries exchange rate flexibility is no longer available to neutralise structural deficiencies. the extent of success is determined by one, major factor - european policy makers must recognise the euro dynamics and live up to the expectations of long - term integration. here lies the central challenge that follows from the introduction of the euro : politicians have to deliver. in that sense, the european council, that convenes in four days´ time in barcelona, will have to put its political weight behind the liberalisation of the energy market and the deadlines of the financial services action plan. moreover, the council should be committed to - for example - the speedy adoption of the european take - over and patent directives, both of which have been on the table for decades. conclusion let me conclude. a representative of the deutsche bank recently said that ´there has been a lot of positive euro speak in the last couple of years, but nothing that has led to better growth´. i disagree ; the virtual euro has brought macro - economic stability and increased dynamics in the internal market, the financial market in particular. moreover, the changeover to the tangible euro has been a major success thanks to the great acceptance and enthusiasm around europe for the common currency. the historical and political importance of the euro for “ an ever closer union among the peoples of europe ” ( preamble treaty of rome ) is without any doubt. however

environment has improved with more price transparency in comparing potential trading partners and less exchange rate risks. on the downside, potential exchange rate volatility remains, as you have experienced between the frank and the euro. given that business services and tourism are central to the swiss economy, there is no doubt that euro coins and notes will increasingly pop up cross border. indeed, large retailers appear to accept euros and a large number of cash dispensers in major cities and at the border produce euro notes. i heard that in this city even ticket machines for car parks are made “ euro - fahig ”. some point to a possible parallel use of the euro in economies surrounding the euro area. in fact, it was the british that first introduced the notion of a parallel currency back in the early seventies, and again during negotiations at maastricht. as an alternative to monetary union, they wanted the intangible european currency unit to compete with the national money. should the european currency prove stable and successful, it would by the laws of nature become the sole legal tender. along these lines, helmut kohl argued recently that switzerland would adopt the euro in 2010 at the latest. however, i think that mature countries such as the uk, sweden or switzerland, are not likely to take on the euro as national currency without further political integration with the eu. in other words, they will have to be part of - and committed to - economic and monetary union. here, we can draw a parallel with, for example, the limited role of the us dollar in canada - despite the relative economic weight of the us and strong trading relations in the context of the north american free trade area. future challenges and dynamics of the euro it appears, i am already looking into a crystal ball, so let me move on to the future challenges and dynamics of the euro for europe. the dynamics of the euro clearly lie with the expectations and pressures of markets and the public opinion at large. a good example is the recent agreement in the eu that the costs of cross border bank transfers should be substantially reduced. in a similar vein, economic agents simply do not accept that cross border security transactions are more expensive than within the us. therefore, the european parliament recently accepted the report, prepared under chairmanship of baron lamfalussy, that foresees in speeding - up decision - making on the elimination of barriers in the european security market. this plan is part of an ambitious eu programme to create a truly integrated financial