european economy is obviously correct. the euro will be a stimulus to structural reforms. most importantly, the single currency is decisively contributing to achieve the single market in the three markets of goods, services and capital within the euro zone. and the euro will also encourage “ cross fertilisation ” of best practices through stronger co ordination of member states policies in areas such as labour markets, education and training, job creation incentives, effective welfare safety nets, etc. in this sense, the euro – which is in itself a major structural reform - must, and will certainly, bring about other structural reforms. i the fourth condition is that all economic leaders in europe must be clearsighted with regard to the crucial matter of competitiveness. pre - euro economic policy meant in particular monitoring trade balances, the balance of payments and the foreign exchange and interest rate markets. economic leaders thus received constant and to a large extent real time feedback on key indicators affecting national economic performance and could react accordingly. these indicators remain on the euro - wide level : this is why the mutual surveillance of fiscal and economic policies provided for by the treaty is so important. but they have disappeared at the national level with the advent of the euro, whilst the. rules of a market economy continue to apply to each economy participating in the euro zone. jobs are created by consumers when they choose the goods and services they feel are the best value for money. businessmen allocate these jobs to different possible locations in different countries according to the relative competitive advantages of these locations. therefore the leaders of each national economy must monitor competitiveness through indicators such as unit production costs, tax and regulatory frameworks and so forth. this is even more important than before. the emu will reinforce monetary and financial stability the international role of the euro with regard to the international role of the euro, let me say that the eurosystem does not regard it as part of a zero sum game in an atmosphere of confrontation. on the contrary, i view it as a positive sum game, based upon close international cooperation and certainly not on confrontation. the international role of a currency is a complex matter. a currency can be used by different groups of economic agents for different purposes, as an anchor and reserve currency on the official side, as an invoicing and payment currency for international trade, as well as a currency of denomination for financial assets, on the private side. my understanding of the process towards internationalisation of the euro is based on the following observations : i

firstly the euro, as i said before, has the full legacy of the most credible currencies in europe, taking into account the fact that the european monetary convergence process has been based upon a benchmarking principle. the euro is not starting from scratch but from the solid soil of currencies having proved their solidity over time like the franc, the dm, the guilder, and so forth ; i secondly, the policy which is pursued by the european central bank is a policy of stability, credibility, low inflation so that the euro will be an excellent store of value. this is called upon us by the treaty. it is clearly the will of the european people. only to give you an example of the support of the public opinion for a reliable euro : according to a french poll, 95 % of the population was in favour of a euro at least as solid, reliable and strong as our previous “ franc fort ” national currency ; i thirdly, the process of economic and financial globalisation, the trend of increase in international trade calls in the long run for increased demand worldwide for official reserves and for highly reliable monetary and financial instruments. this explains why the progressive internationalisation of the euro will, in my eyes, be totally non - confrontational but cooperative. the exchange rate relationships of the euro area vis - a - vis key global currencies as regards the exchange rate relationship vis - a - vis major currencies, i think the best for me would be to reiterate the position of the eurosystem which has been expressed by wim duisenberg in the name of the full body of the council of governors of the eurosystem : “ in the view of the governing council the major economic factor behind the short - term developments observed in the exchange markets is constituted by cyclical differences between the euro area and the united states, which are expected to diminish over the course of this year and thereafter. the euro is a currency firmly based on internal price stability and therefore has a clear potential for a stronger external value. ” to sum up we have two main messages to global investors and savers : firstly, we pursue a policy which is designed towards price stability and currency solidity in a steady medium and long - term perspective ; secondly, the euro has a significant potential for appreciation. in conclusion, let me stress the following : the international cooperation under the aegis, in particular, of the g7, has been very fruitful regarding