gertrude tumpel - gugerell : ten years of european monetary union – what is the role of national central banks today? speech by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the austrian national bank ’ s high level evening panel discussion : “ ten years of european monetary union : what is the role of national central banks today? ”, brussels, 6 may 2008. * * * ladies and gentlemen, i would like to thank very much the oesterreichische nationalbank for inviting me and i am very pleased to be here today in brussels to speak about “ 10 years of european monetary union : what is the role of national central banks today ”. in less than one month ’ s time, the eurosystem will celebrate its 10 - year anniversary, as it was on 1 june 1998 that the european central bank ( ecb ) was founded and with it the eurosystem. as many of you know, i have had the opportunity to work and contribute to the eurosystem activities from both sides : from the perspective of a ncb, as a former board member of the oesterreichische nationalbank, and from that of the ecb, in my current position. therefore, it is a particular pleasure to speak today about the achievement of emu and the role of the ncbs in the success of european monetary policy over the last 10 years. 1. the main achievements of emu the introduction of the euro has undoubtedly been one of the most important steps towards european integration. we cannot stop if the whole world around us is in motion jean monnet wrote in his memoirs. however this is not to say that the path has been easy and without criticism and scepticism on the part of some. it has been almost 40 years since the first european consultations and discussions on a monetary union took place. the first attempt, under the chairmanship of the luxemburg prime minister werner, to establish a monetary union failed as the discrepancies in the national policies appeared still too large. it was over 15 years later that the delors group started working on a report that culminated in the maastricht treaty in 1992 that provided a three - stage plan for the establishment of a european monetary union. however, related to the difficulties faced by the european monetary system in the beginning of the 1990s the enthusiasm for a common currency at that time was still limited. today the euro belongs to

in greater detail, starting with the economic analysis. since september 2008 the financial market turmoil has intensified and broadened. tensions have increasingly spilled over from the financial sector into the real economy. as a result, economic activity throughout the world, including in the euro area, has weakened further. in particular, foreign demand for euro area exports has declined, and euro area domestic activity has contracted in the face of weaker demand prospects and tighter financing conditions. the survey data and monthly indicators for november and december that have become available since our last meeting clearly point to a further weakening of economic activity around the turn of the year, indicating the materialisation of previously identified downside risks to activity. looking further ahead, on the basis of our current analysis and assessment, we continue to see global economic weakness and very sluggish domestic demand persisting in the coming quarters as the impact of the financial tensions on activity continues. at the same time, we expect the fall in commodity prices to support real disposable income in the period ahead. furthermore, the euro area should over time reap the full benefit from the effects of policy measures announced over recent weeks. in the view of the governing council, this outlook for the economy remains surrounded by an exceptionally high degree of uncertainty. overall, risks to economic growth remain clearly on the downside. they relate mainly to the potential for a stronger impact on the real economy of the turmoil in financial markets, as well as to concerns about the emergence and intensification of protectionist pressures and to possible adverse developments in the world economy stemming from a disorderly correction of global imbalances. it is crucial that all parties concerned make their contribution to lay sound foundations for a sustainable recovery. for this to materialise as early as possible, it is of the utmost importance to maintain discipline and a medium - term perspective in macroeconomic policymaking, pursuing a stability - oriented and sustainable approach. this is the best way to preserve and enhance confidence. the significant measures being implemented by governments to deal with the financial turmoil should help to ensure trust in the financial system and to ease constraints on credit supply to companies and households. with regard to price developments, annual hicp inflation has declined substantially since the middle of 2008, when it peaked at 4. 0 %. hicp inflation was 1. 6 % in december, after 2. 1 % in november. as we have emphasised on previous occasions, the significant decline in headline inflation in the second half of 2008 reflects mainly the sharp falls