##s. after touching on the implications of our experience for the monetary integration of the new member states, i would like to return to my original topic, austria after 10 years of eu membership. here one event clearly stands out : the introduction of the euro in 1999. the introduction of the single currency was a major success for austria, the euro area and from a global perspective. let me mention just a few aspects of this success : the integration of money and capital markets in the euro area has lowered cross - border barriers, has increased the depth and breadth of financial markets and has thereby boosted their efficiency. market integration has also led to the convergence of long - term interest rates toward the rates of the best performers. all this and in particular the single currency have improved the resilience against financial market crises, such as heightened exchange rate and interest rate volatility, which had beset us all too often before 1999. turning to monetary policy, the independence of the eurosystem and its primary objective of maintaining price stability over the medium term have become a global standard. price stability unambiguously represents a precondition for sustainable economic growth and rising employment in the medium run. not only has the euro helped to lower inflation rates in member states, but the euro area itself has become a stable monetary anchor in the global economy. the aim of the eurosystem to maintain inflation rates close to but below 2 % over the medium term is widely accepted. with inflation averaging 2 % since the start of emu, we have by and large achieved this goal, despite quadrupling oil prices and a difficult macroeconomic environment. on top of this, monetary policy with historically low interest rates has taken on its share of the burden in supporting economic activity and employment. the public and the markets can trust that the governing council remains firmly committed to deliver on its mandate of maintaining price stability. with respect to fiscal policy, the eu treaty and the stability and growth pact oblige euro area member states to achieve budgetary positions close to balance or in surplus, in order to provide a safety margin to the 3 % deficit limit. however, the fiscal track record of the euro area is mixed. in the early years of emu, the stability and growth pact led to an end of ever - rising debt ratios. since then, fiscal discipline has regrettably deteriorated in some member states, which cannot be explained by weak economic growth alone. the governing council of the ecb is seriously concerned about the recent

klaus liebscher : the euro area - an anchor of stability in europe and the world luncheon speech by mr klaus liebscher, governor of the oesterreichische nationalbank, at the east - west - conference, wien, 6 november 2001. * * * ladies and gentlemen, i am glad to have this opportunity to personally thank you all for your participation and all speakers for their active involvement in this year ’ s east - west conference, which centers on topics that are of long - term relevance for eastern, central and western european countries, of relevance to the growing integration and historic reunification of our continent, but certainly also of relevance outside europe. it is a pleasure for the oesterreichische nationalbank to continue the long tradition of offering our annual east - west conferences as a platform and a meeting place for debates on issues relevant to those countries – but not only to them – in order to help developing answers to the challenges ahead. since the very inception of transition, the oesterreichische nationalbank has had the opportunity to be an active partner for central banks in transition countries. at the same time, the oesterreichische nationalbank has been actively participating in another historic project, the realization of the european economic and monetary union ( emu ) and the introduction of the euro. the establishment of the euro as the single currency in 12 sovereign countries of the european union was certainly not a purely economic move, but rather another major step in the process of european integration that began more than half a century ago. ladies and gentlemen, the strong rise of commodity prices, in particular of the oil price, in 1999 and 2000, recent economic turbulences in some emerging markets and the tragic events of september 11 have not compromised stability in the euro area. on the contrary, and i would like to stress this especially, emu, among other factors, contributed to avoiding possible exchange rate or financial tensions in europe. however, the terrorist attacks on the u. s. have further dampened global economic activity in 2001 and will postpone an economic rebound at least for one or two quarters in 2002. apart from the irreplaceable human loss, the direct effect of the terrorist attacks on the overall u. s. economy is likely to be limited. however, the indirect effects on private consumption, investment and savings could be more significant as confidence of consumers and business has already stated to fade. due to increased uncertainty, investors have become more risk - averse.