ms. hamalainen discusses monetary policy in emu discourse by the governor of the bank of finland, ms. sirkka hamalainen, at the 1998 penningpolitiskt forum in stockholm on 22 / 4 / 98. the launch of the single monetary policy at the start of 1999, it now seems, will not bring any overwhelming shocks to the conduct or instrumental settings of monetary policy in the euro area. the implementation of monetary policy is already much the same across the eu countries. moreover, work on the detailed harmonization of monetary policy instruments or systems for payment transfers, needed for smoothing liquidity across the euro area, seems to be progressing well in the eu countries. as regards the current monetary situation, exchange rates are close to their central rates in all the prospective emu countries, led by market forces. likewise, long - term interest rates have converged closely as a result of market expectations, and most of the key central bank rates - as well as short - term market rates - have moved into very close alignment. the background for this is of course the broad economic convergence of prospective emu countries. we would nonetheless be burying our heads in the sand if we were to overlook the fact that in some countries there is concern about a possible pickup in inflation, at the core countries ’ interest rate level, unless fiscal policy is tightened in these countries. these concerns are based on historical experience. however, it is very difficult to estimate how much expectations regarding emu membership have also changed the behaviour within the inflation process. * * * decision - making in respect of the common monetary policy from the start of 1999 will take place within the governing council of the ecb, which will be made up of the governors of member - country central banks and the members of the executive board of the ecb. in the decision - making, each member will have one vote, which means that a representative of a small country will have the same voting power as a representative of the german or french central bank. from the national central banks ’ perspective, it is important to note that it is only monetary policy decision - making that will shift to the european level. other central bank functions, such as those concerning the stability of the financial markets and management of the currency supply, will remain at the national level as will all monetary policy operations and investment of foreign reserve assets. that is to say that the national central banks will continue to be national institutions, despite their membership in the european system of central banks.

for these company buffers, their creation is directly connected with wage restraint during economic booms. the creation of buffers is just as important for the public sector as for the corporate sector, particularly in the central government. it is necessary to generate budget surpluses during economic booms, in order to have room for manoeuvre in bad times and to endure deficits in times of recession within the framework of the stability and growth pact, and its 3 per cent of gdp limit. responsibility for curbing the booms and softening the recessions will shift in the emu world to a much greater extent than before to fiscal policy. here political decision - making will face strong pressures and challenges, both in finland and in many other countries. on the whole, it is good to keep in mind that a monetary union country with good central government finances will certainly have far more room for independent economic policy manoeuvring than will a non - monetary union country with a large central government deficit and debt. [UNK]