5 %. this was well above the potential growth rate of the dutch economy and 1 percentage point above the average of the so - called eurozone, the economy of the 12 countries that have adopted the euro as legal tender. the current cyclical downturn thus was - to some extent - to be expected after a prolonged period of economic expansion at a speed above potential. it is worthwhile to look into the reasons for this over performance, as they might give a clue for the subsequent downturn. mostly, the seeds for downturns are sawn during the upturn. the main growth engines during the upturn were, firstly, rapid consumption growth due to among other things a booming housing market. secondly, exports thrived as a result of a substantial improvement of our international competitiveness as well as favourable global economic conditions. the robust growth subsequently led to a tightening of the labour market, culminating in an unemployment rate of only 2. 4 % in 2001, compared to 8 % for the eurozone as a whole. incidentally, employment figures in the netherlands are as flattered as in other european countries, such as germany : in our own country because of the relatively large number of inactive people as a result of initially generous disablement insurance schemes. in germany, the existence of subsidised jobs cloud the picture. nevertheless, the labour market developments in the netherlands caused a strong increase in unit labour costs, for which we ultimately had to pay the price. the eventual significant loss in price competitiveness, in combination with the global economic downturn, stalled our exports. moreover, the disappearance of wealth effects due to the stabilization of house prices has taken their toll on households ’ disposable incomes, and as such on consumption. to give an example of the magnitude of these forces : the annual contribution to gdp growth from housing wealth has turned from an annual 1 % - point impulse between 1998 and 2000, into a negative contribution of half a percentage point in the past three years. taking these wealth effects stemming from the housing market into account scales down the present growth gap between the netherlands and the eurozone. another possible downward effect on growth in the short term stems from the significant budgetary adjustment the dutch government is implementing. nevertheless, this adjustment, which is larger than in most other eurozone countries, is necessary not only to adhere to the european budget rules but also to enhance durable growth recovery. i will come back to the need for budgetary discipline at the european level at the

dr. duisenberg assesses the future importance of the euro address by the president of the netherlands bank and of the bank for international settlements, dr. w. f. duisenberg, on the occasion of a dinner hosted by the board of directors of the ‘ association for the monetary union of europe ’ ( amue ), at kasteel de wittenburg, wassenaar, 4 / 3 / 97. 1 it is a great pleasure for me to be able to address you here tonight in wassenaar. your association has always been among the strongest supporters for speeding up european integration, particularly economic and monetary union ( emu ). this emphatic support gives the speaker the luxurious feeling of playing before a home audience. 2 tonight, i would like to ponder two issues related to the future importance of the euro. first, what are the chances of the euro becoming an important reserve and invoicing currency? second, how should the european central bank deal with the external value of the euro? future role of the euro as a reserve and invoicing currency 3 i know that the first issue - the future role of the euro as a reserve and invoicing currency - has been receiving a lot of attention from your association over the years. as a matter of fact, you very strongly believe in a powerful role for the euro. i quote from your latest report : “ by placing europe in a much stronger position vis - a - vis the united states of america and other countries, the introduction of the euro improves investor climate and ultimately favours employment. also, the use of the euro will rapidly develop world - wide, in proportion to the external trade of the european union which already ranks first in the world ”. i very much welcome this positive approach to the euro. the internationalization of the euro is only partly in the hands of european policy - makers. policy - makers can provide for the right incentives by pursuing sound policies, thereby making their currency attractive. but, at the same time, the success of the euro is also in the hands of the markets. in this respect, i would encourage the european business community to take every opportunity to promote the private use of the euro and increase its role as a vehicle currency and store of value. 4 let me elaborate a little by discussing three major factors that will determine the future importance of the euro : the stability of the euro, the amount of trade conducted in it, and the depth of euro financial markets. safeguard