miguel fernandez ordonez : a decade with the euro speech by mr miguel fernandez ordonez, governor of the bank of spain, at the conference “ 10th anniversary of the entry of spain into the emu ”, bank of spain, madrid, 27 february 2009. * * * let me first welcome you and thank you for being here today at the banco de espana headquarters for this conference commemorating the tenth anniversary of the creation of the economic and monetary union ( emu ), of which spain was a founding member. i particularly appreciate professor rojo joining me here for these opening remarks. he was the architect of the enormous effort of persuasion and economic and monetary policy action that secured spanish access to the union. he was the governor of the bank from the signing of the maastricht treaty until 2000, when the project had become a reality and when, to many people ’ s surprise, the spanish economy had successfully completed a rocky road to convergence. a celebration like today ’ s without the presence of somebody so closely involved in this project would have been incomplete. thank you, angel. for a country such as spain, which has frequently been a late arrival at defining events in modern history, having been a founder member of this key project of european integration is a landmark. it demonstrates spaniards'willingness and ability to contribute actively to european construction and, therefore, to the present and future welfare of its citizens. european integration is a dynamic project, permanently under construction, which is today facing up to the challenges of a global economic recession and an international financial crisis of proportions unseen in many years. over ten years ago, before the euro was created, there was an academic debate turning on the theory of optimal currency areas, which questioned whether a single interest rate and, therefore, a single monetary policy could possibly be appropriate for such diverse countries. ten years after the birth of the euro those of us who joined emu, and many of those who did not, acknowledge the enormous advantages of being inside the monetary union. today, the contribution of the single currency in lessening uncertainty for economic agents is clear. the enormous advantages of moderate inflation, of interest rates with a limited range of volatility and of the fact that companies need not consider the exchange rate when buying and selling in an area with almost three hundred and thirty million consumers, are obvious. the upshot is stability, which is a valuable contribution to growth, as we have seen in other, similar - sized monetary areas such as the united states

, and we should build on it. we should also celebrate the institutional success of the eurosystem. the ecb has fulfilled the goal entrusted to it by the treaty, of keeping inflation expectations anchored, even at very difficult times. and the eurosystem is in itself a truly fascinating experiment. those of us privileged to meet every fortnight in frankfurt bear constant witness to the success of this undertaking, which is unique in the process of european construction. the eurosystem blends centralised and decentralised decision - making, reflecting perfectly the common european project. on one hand the ecb takes centralised decisions for three hundred and thirty million citizens who have the euro as their common currency, while on the other, the eurosystem operates in a highly decentralised and co - operative manner. the national central banks are involved in many joint projects. but allow me to discuss one with which i have been closely concerned in recent years : the launch and design of target 2 securities which, behind this singular acronym, is an ambitious project that will facilitate securities settlement throughout europe. this platform is being designed and constructed by four central banks : germany, france, italy and spain. any pro - european would be most satisfied to see officials of the banks from these countries working together every day on a common project. critics of the euro, who are quite frankly a minority today, try to argue that the divergences observed across the monetary union members in terms of inflation and growth during its first ten years have been a problem. but the figures are not on their side. over the past decade, inflation and growth diversity among the emu members has been very moderate compared with what had previously occurred. and compared with other regions, this diversity, though somewhat more persistent, has been on the same scale as the heterogeneity across the different us regions and states, being the united states an example of a monetary union of approximately the same size as the euro zone, and whose viability is unquestioned. nobody considers that these divergences would advise california to have a different currency from that of new york or illinois. what's more, empirical evidence from emu shows that national business cycles have, with economic and monetary integration, become more synchronised. admittedly, though, growth and inflation differentials that we should reduce have persisted over this period. however, the solution to this problem should not be sought by questioning what the euro can do to reduce these differences.