. the importance of the euro area and its economic policies is fully recognized at the international level, as is evidenced by the rapid integration of ecb representatives in the various fora responsible for international policy co - ordination. the challenge will be to use this new influence and power wisely, and to withstand the temptation to distract from unpleasant domestic economic policy requirements through misplaced activism at the international level. the economic impact of emu on the euro area 2. this leads me to the second area, the economic impact of emu on the euro area and the interplay between the eurosystem ’ s monetary policy and the other areas of economic policy. in the short run, emu means substantial costs - one only has to think of all the activities related to the changeover weekend at the start of this year and the forthcoming replacement of banknotes and coins. at the macro level, there were also the unpleasant short - term effects of disinflation and fiscal consolidation required in many member states to qualify for participation in the monetary union. note, however, that these measures would in any case have been necessary, with or without emu. furthermore, i should like to emphasize that these short - term efforts are a necessary - and profitable investment into europe ’ s political and economic future. the benefits of sound fiscal and monetary policies are already today reflected in the historically low level of inflation throughout the union, in low interest rates and in stable exchange rates. all these factors are, in the long run, conducive to growth and employment. the stabilizing impact of emu was to be felt well ahead of its inception. just think of the virtual absence of negative spill - over effects from the international emerging market crises on eu financial and exchange markets. contrary to the early 1990s, the eu is now generally recognized as a safe - haven of stability, steadiness and economic reliability. the strong convergence, observed in the run - up to emu, of short and long - term interest rates to the levels of the most stable eu currencies has contributed to monetary conditions favorable for growth and employment. real interest rates in the euro area are now considerably below their average levels observed over the past decade. while the benefits of emu are quite obvious even in the short run, the real dividends from monetary union are yet to come. the positive “ shock ” that emu implies for our economies ’ productive capacity will propel european long - term growth, allowing higher real growth and

joined the european union, participation in the erm ii will be a relevant option for them until their economies will be ready to join the monetary union on a sustainable basis. the built - in flexibility of the erm ii could be very helpful. it allows for a gradual reduction in the fluctuation margins. in the meantime, many of the rules of emu, like the prohibition of government financing by the central bank, the independence of central banks from any political interference or the clear stability - oriented mandate of the central bank, can serve as benchmarks for the ceec countries. i am well aware that considerable progress has already been made on this path in several countries but some work still remains to be done. emu can work as a catalyst in this respect, speeding up the necessary political decisions within ceecs and helping the respective central banks. a crucial point on the path towards eu and emu - membership is the development of a “ stability culture ”, i. e. the wide - ranging consensus within a country that the principal and most important task of monetary policy is to ensure price stability - a necessary condition for sustainable growth and hence for the catching - up process. this primacy of stability has to be recognized and accepted by all relevant political forces, which in turn calls for the respective central banks to do a lot of explaining and convincing - a process that has to start as early as possible. without such a consensus, a successful integration into the union, and even more so into the euro area, cannot or at least is very difficult to be achieved. therefore, this “ convergence of minds ” is just as important as the other formal convergence criteria. thus, membership in the euro area will be a rather long - term perspective for the transition countries as the successful and sustainable adoption of a single currency will require more preparation than the fulfillment of the well - known ( nominal ) convergence criteria. it will be in the interest of the accession countries themselves to join monetary union well prepared. ladies and gentlemen, let me summarize by extracting three key messages : first, emu took off very well. both on the european and national levels, the relevant authorities and the private sector did their homework in the preparatory work. the eurosystem and its monetary policy are well on track. the euro area ’ s important role in the world economy is reflected in the recognition shown by various international fora. rules for sound national fiscal policies are in place. nevertheless there are important challenges : governments