the european union is currently conducting accession negotiations with further twelve, mostly eastern european, countries. obviously, any enlargement affects the decision - making within the european union. as the union becomes larger, a gradual move away from unanimity decisions in favour of qualified majority voting is imperative to safeguard the efficiency and workability of the union ’ s decision - making procedures. it is against this background that the treaty of nice, agreed in 2000, foresees a number of institutional changes for the european commission, the council and the european parliament. in particular, voting weights in the council were adjusted to accommodate new eu member countries. also the structure of the european commission was streamlined. no doubt, the current wave of enlargement will be the largest and most challenging ever. 2. two years of the euro : achievements and challenges ladies and gentlemen, let me now zoom in from this broad, long - term perspective on the recent past and the near future of the euro. as you probably know, the so - called eurosystem, which comprises the european central bank in frankfurt and the national central banks of the euro - area countries, took over responsibility for monetary policy in the euro area on 1 january 1999. this means that all monetary policy decisions are taken at the bi - weekly meetings in frankfurt of the ecb governing council. the governing council comprises the six members of the ecb executive board, including the ecb president, and the governors of the now twelve euro area national central banks. inter alia, the ecb council decides on the official interest rates at which banks can obtain liquidity from the central bank. there are two important institutional features which ensure that price stability will be maintained in the euro area on a lasting basis : first, the eurosystem is granted institutional, functional, personal and financial independence in the design and conduct of its monetary policy. second, the maastricht treaty unambiguously enshrines price stability as the eurosystem ’ s primary objective. to testify about the fulfilment of its treaty mandate, various mechanisms of democratic accountability have been installed ; for instance, the ecb president has to appear regularly before the european parliament for questions and answers. there is no doubt that monetary union has - contrary to all sceptics - turned out as a full success. exchange rates between the participating currencies were irrevocably fixed on 1 january 1999 and the new federal central banking system took over monetary policy. already

of eurocurrency reserves held worldwide amounts to some 13 %. moreover, approximately 50 states already use the euro as their nominal anchor currency. but also trade transactions will over time increasingly be switched over into euro, thus sheltering european businesses from international currency fluctuations. ladies and gentlemen, for economic policy makers, the euro provides a strong incentive to reinforce economic reform. let me just quote two examples : fiscal policy and structural reform. as you know, before entering the euro area, a country has to satisfy strict economic convergence criteria. the latter include the observance of limits on the government deficit and debt. governments strengthened this unique arrangement already ahead of the start of the euro by agreeing on the so - called stability and growth pact. this pact stipulates, among other things, that governments commit themselves to achieving balanced budgets or fiscal surpluses over the medium run. in practice, the stability pact has so far been taken very seriously, and the majority of eu countries already exhibits budget surpluses. also austria has commited itself in its so - called stability program to achieve a balanced budget by next year. let me emphasize : the firm adherence to stability and growth pact is key to europe ’ s and austria ’ s long - term attractiveness as a business location, and therefore for growth and employment. the second example of a policy area, where the euro exerts strong reform pressure, is structural reform. with a single currency across the euro area, divergent economic developments among the euro area countries need to be absorbed by adjustments in goods and labor markets. the more flexible and the faster these markets react to economic disturbances, the better for growth and employment. economic reforms which aim for such flexibility are thus high on the agenda. european politicians have therefore taken a number of important initiatives in the past three years to foster structural change and adaptability of the european economy. the so - called " luxembourg process " calls for employment guidelines to be issued on an annual basis, which recommend actions to raise the flexibility and the skill level of the work force. the " cardiff process " aims at structural reforms in the product and capital markets by establishing best practice models and benchmarking. finally, in lisbon 2000 the european union set itself the goal to become the most competitive and dynamic knowledge - based economy in the world, inter alia by further liberalisation of network industries and an extension of benchmarking in new policy areas. ladies and gentlemen, to be sure, living with the euro is not just plain