otmar issing : monetary policy in a new environment speech by professor otmar issing, member of the executive board of the european central bank, at the joint bundesbank / bis conference on “ recent developments in financial systems and the challenges for economic policy ”, held in frankfurt, 28 - 29 september 2000. * 1. * * the new monetary policy environment - challenges for the ecb on 1 january 1999 the european central bank ( ecb ) assumed responsibility for monetary policy in the euro area - the second largest economic area in the world after the united states. overnight, the euro became the currency of almost 300 million people. the transfer of responsibility for monetary policy from eleven national central banks - many of them characterised by long histories and impressive track records - to a new supranational institution was met with a great deal of scepticism. sceptics noted the historically unique situation created by the asymmetry between, on the one hand, a single central bank and, on the other, eleven - and, with the participation of greece from january 2001, soon to be twelve - national governments. the adoption of the single currency marked a watershed in the history of european integration. it constituted a fitting climax to what was overall a period of impressive, if at times hesitant, progress in this direction through the second half of the 20th century. in the 21st century too, european integration will no doubt enjoy periods of progress punctuated by occasional setbacks. for example, while the enlargement of the european union ( eu ) is an important goal, it will call into question the eu ’ s entire institutional structure. the single monetary policy will also be affected by the accession of new members. this is simply one example of what will be the main theme of my remarks. both the european central bank and the single monetary policy are - and will continue to be - faced with great challenges. among these challenges numbers the continuing problem of high unemployment. unemployment in the euro area remains intolerably high and constitutes the main economic and social problem facing policy makers. the euro area economy cannot exploit its potential for employment and real economic growth unless the implementation of appropriate structural reforms results in more flexible labour markets, less regulation in product markets and lower taxation. the best contribution monetary policy can make in this regard is to maintain price stability and low inflation expectations, thereby providing an environment in which structural reforms will work most effectively. this having been said, an assessment made today of the first 21 months

##worthy economy following the attainment of the hipc completion point, the bank of zambia, together with government, is working on ensuring that our institutional arrangements are supportive of keeping the global investor audience, amongst others, informed about domestic economic developments transparently and on an ongoing basis. for instance, we believe that obtaining a formal sovereign credit rating would help us build part of the necessary institutional arrangements of keeping all stakeholders informed. much in the same way, the zambian private sector in general and celtel zambia plc in particular has the challenge of opening up to creditworthiness scrutiny and withstanding world - class due diligence by recognising and upholding good corporate governance norms of transparency, accountability and fairness. we are also aware that a formal sovereign credit rating undertaken by international credit rating agencies would not only further open up zambia to global financial markets but also permit the appropriate reflection of our sovereign creditworthiness or risk premium in private sector financial dealings, which we believe is currently much better than generally held by both domestic and offshore market participants. in other words a good sovereign rating would improve the terms and conditions of international financial dealings for the zambian private sector and businesses which could also be passed on to consumers in terms of affordable pricing and improved product quality. ladies and gentlemen, today ’ s event therefore is an opportunity for honest introspection, though, this time not about the potential of our economy but about our own private and collective resolve of translating this potential into jobs, incomes and a quality life for all. we all need to recognise and understand that our commitment to upholding good corporate governance practices in both the public and private sectors and the resultant confidence and trust of our citizens, customers and clients be it in government policies or private sector goods and services is inescapable for the long term health of both our society and businesses. in short, good governance works and we should all simply try it! in conclusion therefore, i would like on behalf of bank of zambia and indeed on my own behalf to commend the zambian commercial banks, international banks and development finance institutions that have participated in this syndication. this is not only testimony of their confidence in celtel zambia plc but confidence in the zambian people and the economy as well. i thank you.