. furthermore, from 2008 on a revised enterprise taxation will be valid. i don ’ t want to keep secret, that there is still some way to go, however. just to mention one or two examples : some 25 % of the new jobs in germany are temporary, whereas only 4 % of the labour force stock is temp - work. this shows the need for further amendments of the labour market flexibility. another example is the german deficit. from my point of view we are right now in a good position to go for a balanced budget and we are still a good way off. concluding remarks let me conclude : a monetary union does not automatically lead to a high decree of competitiveness and good economic performance, but the remove of the “ veil of exchange rate ” puts the finger on the root of the matter, i. e. the structural weaknesses of a country. taking all this together, germany is a classic example of how market - related adjustments can work and be effective under the rules of a monetary union.

franz - christoph zeitler : global competition – what makes europe competitive? panel contribution by professor franz - christoph zeitler, vice - president of the deutsche bundesbank, at the conference dedicated to the 15th anniversary of the re - introduction of the estonian kroon, at the bank of estonia, tallinn, 23 may 2007. * * * introduction the previous speakers have already ( and rightly ) highlighted europe ’ s ongoing need for structural reforms. in order to fully use the benefits of globalisation, it seems obvious to me to increase the flexibility of our labour and product markets. however, i would like to focus on a slightly different issue today : • to what extent has monetary union enhanced economic performance • and thereby helped to improve the competitiveness of its member states? i shall start with an overview of the entire euro - area and then move on to consider the case of germany. the international role of the euro despite being considered as a bold experiment by some sceptics, european monetary union ( emu ) has lived up to our expectations. in particular, the euro has gained the same level of monetary stability and confidence as the most stable of its prerunner currencies : the average inflation from 1999 to 2006 in the euro - area was 2. 05 %, only slightly above our definition of price stability. this is below the long - run average inflation rate of the deutsche mark, which was 2. 8 %, although this higher figure is partly owed to the more difficult international environment for example in the 1970s. moreover and in addition to price stability, the euro plays an important role as an international currency and in the international trade. today, it ’ s second only to the usd. firstly, the share of the euro in official foreign exchange reserves has increased from 18 % in 1999 to almost 26 % in 2006. even if one has to take into account the exchange rate developments and the build - up of foreign reserves of the asian countries in that time span, the rising share of the euro as an reserve currency mirrors a high degree of third party confidence in the currency union. secondly, as for international debt securities, the stock of international debt securities in euro rose from 19 % in 1999 to 32 % in 2006. this developments reflect the growing depth and liquidity of euro - area financial markets – a feature that has been heavily promoted by the common currency acting as a catalyst for the eu ’ s single market programme. as financial markets and economic development are closely linked, broad