erkki liikanen : the euro, integration and growth remarks by mr erkki liikanen, governor of the bank of finland, at the brussels economic forum 2008 on economic and monetary union in europe : 10 years on, brussels, 16 may 2008. * * * ladies and gentlemen, ten years of experience have shown that the monetary union has made a tremendous contribution to the underpinnings for stable growth in the euro area. the most important channel has been the maintenance of monetary stability, which reduces distortions and costs caused by price uncertainty. in this respect, the euro has done very well and this has been reiterated many times today. rightly so. i want to discuss other important aspects of growth in the euro area, many of which benefit from the common currency. i will start by saying a few words about the role of financial integration in catalyzing financial development. related to this, i will discuss briefly some recent studies that show how equal access to financial markets is an important determinant of competition in the broader economy. and finally, i will talk about productivity in non - market services ; in particular, how improved productivity in the provision of public services will be indispensable in reconciling sharply rising old - age dependency with acceptable level public services. the last aspect is particularly crucial now in finland, which is the first eu country to face population ageing, but it will soon been a major issue for the others, too. but let me start with financial integration. financial integration and growth it is difficult to think of a less opportune time to preach the virtues of financial integration. things being as they are, one gets the impression that what global financial markets are propagating today is not growth, but risks and instability. the persistent turbulence since last august has demonstrated once again that financial markets suffer from bipolar tendencies. overshooting tends to be followed by undershooting. this time, a period of exuberance and indifference towards risk has been followed by a period of exaggerated nervousness, risk aversion and distrust. once again, there are lots of lessons to be learned for financial institutions, central bankers, regulators, supervisors. our vocabulary has been enriched by great many acronyms that were hardly heard of a year ago, such as abs, cdo ’ s, siv ’ s, abcp ’ s and so on. we are just starting to form a picture of what this debacle means for policies. eventually,

for the eurosystem's monetary policy. indeed, it was emphasized that some growth dispersion within monetary union is inevitable and even desirable. related to this, i am personally fully convinced that individual euro area countries can cope with asymmetric shocks that are inevitable fact of life in a monetary union. indeed, before finland joined emu, there was much skepticism about its suitability for a country whose economy, in particular its export structure, was very different from the rest of the euro area. after more than eight years in the monetary union, many of the feared asymmetric shocks have been realized ( e. g., volatile swings in the telecom sector and significant weakening of the u. s. dollar ) but the finnish economy has performed well, both in terms of growth and price stability. turning back to the case of africa, it seems that the combination of heterogeneity ( both cultural and economical ), the larger number of initial participants and the proliferation of overlapping integration initiatives implies special challenges for devising clear and credible decision - making structures to support integration process. at the same time, these initial conditions imply that such structures are indispensable for successful broadening and deepening of economic integration. against this background, the importance of strengthening domestic and supranational institutions by clarifying their decision - making and by making them more transparent and accountable was regarded as essential. conclusion finally, i would like to thank all the participants, especially our speaker and discussants. i think that we had a frank and meaningful discussion of the challenges facing both eu and africa. i think that we all benefited and learned from this discussion that has offered many different perspectives to issues of common interest. it seems to me that, notwithstanding formidable challenges and many potential pitfalls, the outlook for greater integration in the both regions is fundamentally positive. with these remarks, i like to conclude and wish my african colleagues success in their challenging road toward further economic integration in africa.