of the euro through lower transaction costs. this may, in turn, facilitate the development of the euro as a vehicle currency for trade and commodity pricing. in addition, if international investors and issuers consider the euro to be a stable currency, they will hold more euro assets to minimise risks in their internationally diversified portfolios. two processes of great significance for the world economic and political order have unfolded in the last decades : economic globalisation and european integration. they are partially linked. yet they have different roots. one is the fruit of technological process and the free forces of the markets. the other has been motivated by political will and vision. regional integration and international co - operation are surely appropriate means to promote more stability and economic growth in the different parts of the world and to contribute to humanise the process of globalisation. * * * the euro banknotes show windows, gateways and bridges. these symbols of openness and communication will help both to promote a feeling of shared identity and to further strengthen exchanges among the nations of europe. at the same time, these symbols are a reflection of the european attitude towards the rest of the world.

economic power, with a population of around 300 million people, having a considerable purchasing power, which is only exceeded by the united states. thus, the member states of the euro area together represent some 15 % of world gdp, which is less than the united states - with about 20 % - but twice as much as japan. by way of comparison, the biggest country of the euro area by itself is estimated to represent only 4. 5 % of world gdp. monetary union also implies that some exchange rates do no longer exist, as for instance the rate of the belgian franc against the german mark or the italian lira. in the past, the volatility of these exchange rates has been most harmful to the closely interdependent national economies of the european common market. let ’ s think back for instance to the erm - crises in 1992 and 1993. the single currency has completely removed exchange rate risks for exporters and importers, debtors and creditors across the 12 countries of the euro area and has thus eliminated the costs of hedging exchange rate risks vis - a - vis other euro area countries. i notice in passing that this “ internal exchange rate ” stability has often been overshadowed by a disproportional interest in the floating of the us dollar - euro exchange rate. the dollar / euro exchange rate movements have, in fact, been comparable with the dollar ’ s historical fluctuations vis - a - vis the european currencies ( in particular the german mark ) prior to the introduction of the euro. the euro is leading to an increased transparency of prices and greater competition and a thorough integration process has taken place in the area. the integration of the money market and the disappearance of the exchange rate risk have provided a boost to the integration of other financial markets, such as the bond market and the equity markets, be it to a lesser extent. the stability effects which the euro ’ s arrival has brought about and which have improved growth potential in the zone, cover other types of stability : price stability and fiscal stability. 1. there can be no doubt that both deflation and inflation are harmful for both output and welfare in the medium term : they distort the information contained in the price system, imperceptibly change the real value of contracts and savings and heighten uncertainty. they consequently disturb the allocation of resources, the investment process and the income distribution. in the case of europe, this consensus on the contribution of price stability to promoting long - term growth