. • and the political framework for integrating the single currency is a rather loose structure. the euro will have to cope with this as best it can. – 2 – for the goal is not merely to ensure that the euro is stable at the beginning. the goal is to ensure that the euro remains stable over the long term. and in the long term it is highly probable that the euro will need a stronger political underpinning. ii it is gratifying that the financial markets already seem to have largely accepted the euro. at any rate, the euro has passed its first test. the markets apparently have confidence in the preannounced exchange rates. so far there have been no marked tensions between the exchange rates of the future participating currencies. and the euro has already begun to show the first benefits. in the context of problematical developments in the financial markets which in some cases reached crisis - like proportions, the euro has acquired the reputation of a safe haven – even before the actual launching of monetary union – which has led to correspondingly low capital market rates in the future euroland. none of these things should be taken for granted. they are the result of • the rigorous stability orientation of the maastricht treaty, • the large degree of convergence that has already been achieved in the monetary stability policies of the central banks, • the careful preparatory work, and • the determined efforts that have been made to date to achieve greater convergence in fiscal policy, too. the safe haven function which the euro area has performed so far clearly demonstrates that the introduction of the new currency is undoubtedly a ‘ global event ’. and a lot of hopes are being placed on the future international role of the euro. clearly, the enlarged financial market in euroland will result in a wider range of products and a broader choice of investment opportunities. to what extent these greater opportunities will actually be used – especially by enterprises – depends on other conditions as well. these include the legal framework laid down by the eu and by the national parliaments of the countries concerned, the different traditions in respect of financial market structures and also questions of taxation. it remains to be seen just how quickly traditional financial market structures move closer together. and another thing which remains to be seen is the use to which enterprises will put the enlarged capital market. for example, will there be a tendency towards greater concentration as firms seek to exploit ‘ economies of scale ’ in euroland? and what about the other question which central bankers are often asked in

to eu banks stability. in this context, we find that the risk outlook is crucially dependent on the timing and speed of the recovery in the eu economy. however, the outlook for growth in the eu also hinges on global recovery. developments in the us and possible military action against iraq are key external factors in terms of potential risks. adverse macroeconomic developments would impact quite strongly on eu banks ’ profits owing to a significant increase in provisioning needs and a reduction in income from traditional retail banking. nevertheless, we remain confident that the eu banking sector will continue to display a notable capacity to withstand any further shocks in the economic and financial market environment. given this situation, efficient banking supervision is of paramount importance. given the challenges posed to eu banks and potential cross - border implications, coordination among supervisors and central banks in the eu is essential. in particular, the bsc is taking due account of this necessity and providing a common forum. in this connection, it is worth mentioning that stability analyses and the monitoring of structural developments in the eu banking sectors form the core of the bsc ’ s work. thank you very much for your attention.