. – labour productivity progress is much slower in the service sector. if we are to improve productivity in the services sector, we have not only to increase the flexibility of the labour market, but also to bring about resolutely the rapid integration of the services sector. as regards the liberalisation of labour markets, it is essential to adapt to an environment that is changing rapidly as a result of developments in science and technology, and we strongly support those reforms. as regards the integration of financial markets, in addition to acting as a driving force for economic growth, it is also supporting the cohesion of the euro area : it is an effective means of absorbing possible asymmetric shocks within the euro area. what has been the effect on european companies of the introduction of the euro? first, the introduction of the euro has given european companies access to a financial market of the same order of magnitude as in the united states. in addition, the ecb ’ s stability - oriented monetary policy has given companies access to stable financing. it has helped them considerably to benefit not only from the single european market, but from the internationalisation of business. going back to financial integration, let me mention that several initiatives are underway. one such initiative is the target2 project. since the introduction of the euro, the national large - value payment systems have been interconnected through the target system. the next generation of this system is called “ target2 ” and will form a single platform for large payments in central bank money, starting in november this year. in addition, we have proposed the establishment of a single platform for the settlement of securities transactions with central bank money in a system we call target2 - securities. it is important that the ecb fulfils its role as a catalyst for economic activity through enhanced integration of this kind. it has been some time now since the united kingdom left the exchange rate mechanism ( erm ) and there are still some northern european countries that have not yet adopted the euro ; do you think that the euro area will expand further? will it only be the smaller countries that adopt the euro from now on? slovenia adopted the euro in january of this year and there are now 13 countries in the euro area, representing 318 million inhabitants. let me also stress that a further seven countries have linked their currency to the euro, and that 25 of the 27 countries in the eu do not have an opt - out clause, and are thus committed to enter the euro area if and when they meet

the criteria for joining. the euro area is not a closed shop. there are certain standards, laid down in the maastricht criteria, that have to be met in order to join the euro area. the introduction of the euro in slovenia was a great success and i am sure that the euro area will continue to expand. the value of the euro has increased and the central banks of china, russia and countries in the middle east are increasing their component ratio of euro, and there are now more bonds and currency issued in euro than in us dollars ; do you think that the euro could replace the us dollar as a key currency? as far as the exchange rate is concerned, i will say what i signed at the meeting of the g7 on 14 april, namely that “ excess volatility and disorderly movements in exchange rates are undesirable for economic growth. ” i will also repeat that i have noted that the japanese authorities have said they believe the japanese economy to be on a sustainable path of recovery and that the exchange rates should reflect these economic fundamentals. as regards the use of the euro at a global level, the ecb is neutral. we do not campaign for the international use of the euro. that has been our position since the euro was introduced, and that remains our position. do you think that the rise of the newly emerging countries such as china, india and russia, and the rapid increase in oil money, will make it difficult to maintain the stability of the existing global financial systems? what are your views on establishing a new international framework such as the “ plaza agreement ”? first, china already takes part in the g7 / g8 meetings when appropriate. and, second, together with all our partners of the g7, i believe that “ in emerging economies with large and growing current account surpluses, especially china, it is desirable that their effective exchange rates move so that necessary adjustments will occur. ”