procedure and the stability and growth pact. these rules are designed to ensure that a high degree of fiscal discipline supports the single monetary policy in its primary objective of maintaining price stability. thus, while the euro area shows a unique institutional setting – in contrast to monetary policy, fiscal policy is far from being single – national governments have agreed to common rules which ensure that the euro area remains an efficient and stability - oriented single economic area. conclusion let me conclude by saying that the single currency and the establishment of a new european institution responsible for monetary policy in the euro area complemented the process of economic integration that started half a century ago in europe. this process and the institutional build - up, together with clear and coherent policy goals and an efficient allocation of the respective responsibilities, are transforming the euro area into an increasingly unified economic entity which, in many respects, resembles the us. although most of the required structural reforms still have to be implemented, it cannot be denied that substantial progress has been made. the introduction of the euro has been and will continue to be a powerful catalyst, contributing to greater competition in the economic and the political sphere, thereby further enhancing the welfare of the citizens in the euro area. ladies and gentlemen, political leaders throughout europe have recognised the need for structural changes in both taxation and expenditure policies and regarding the deregulation of product and labour markets. in this context, let me point out that the lisbon european council in march 2000 emphasised the need for economic reform, whose implementation is a key condition for the eu to achieve its strategic goal " to become the most competitive and dynamic knowledge - based economy in the world ". the follow - up to the lisbon strategy is ensured by an annual spring european council meeting, the first of which took place in stockholm earlier this year. these follow - up initiatives are also reflected in the recommendations of the broad economic policy guidelines. it is sometimes argued that the euro area can only become a very strong and dynamic economic entity if supported by a fully - fledged political union. i have argued today that there are good reasons that this may not be true. the current policy constitution in the euro area, despite its novelty and uniqueness, is a sound and efficient framework which provides a good basis to ensure that, even without full political union, the euro area can become one of the most dynamic economic areas in the world.

institution, the ecb, with a clear mandate of maintaining price stability. moreover, the treaty defines a clear and efficient allocation of responsibilities, where the single monetary policy is primarily responsible for price stability, while structural and fiscal policies at the national level are responsible for providing the necessary framework for enhancing potential growth and employment in a lasting manner, objectives for which governments, not central banks, have the appropriate instruments. this clear allocation of responsibilities ensures transparency and accountability, further fostering good policies. i do not think that a fully - fledged political union would necessarily guarantee better economic prospects. in this respect, it is interesting to note that national governments will increasingly be scrutinised, both by the electorate and the capital markets, with comparisons being drawn between the economic performance of the various countries within the euro area. also here, it is the single currency which enhances transparency and thus leads to improved competition with positive effects for all citizens. with a single monetary policy, striking cross - country deviations in real growth and unemployment can no longer be blamed on differences in monetary or exchange rate policies. over time it will become increasingly clear that cross - country differences in economic performance are, to a considerable extent, related to national fiscal and structural policies. this will increase the incentives for carrying out structural reforms. the general comparison between the euro area and the us presented above, obviously, does not do justice to the diversity that exists within the euro area. as the responsibility for structural reforms in the eu and in the euro area rests with the individual member states, a wide variety of institutional solutions and regulatory arrangements across countries and sectors exist. in many areas i consider this decentralised approach to be an opportunity, not a disadvantage. it makes possible healthy competition between differing policy designs of national authorities and enables solutions that are tailored to the particular needs of a country or region. this fact, which is a clear advantage of the euro area economy compared with other more centralised economies, is often not recognised enough. decentralised policies offer a unique opportunity to explore different solutions in a competitive manner, allowing the testing of various approaches and, if thought useful, selection of best practices with a high degree of confidence. fiscal policy is a good example of a field where europe found an efficient solution in the form of common rules which keep the advantages of decentralisation and subsidiarity. as is well - known, budgetary policies remain under national responsibility, but effective common rules have been developed in the form of the excessive deficit