and the single monetary policy can result in higher economic growth in the euro area and thereby contribute positively to the development of the world economy. of course, the degree to which these benefits are achieved depends not only on the monetary policy of the eurosystem but even more so on accompanying stability - oriented fiscal policies and appropriate labour market policies. the most important contribution that the eurosystem ’ s monetary policy can make to maximising the benefits of emu is to fulfil its primary objective of maintaining price stability, as laid down in the socalled maastricht treaty ; the treaty on european union. as has long been argued by central bankers and is increasingly accepted by academic economists, inflation and deflation are economically and socially costly. emu is a tool with which to consolidate the progress made towards price stability in recent years and to firmly anchor expectations in line with price stability, thereby establishing the framework necessary to fully exploit the opportunities of monetary union. the eurosystem enjoys full independence in determining the appropriate level of interest rates so as to satisfy its primary objective of price stability. moreover, the members of the governing council of the ecb have long terms of office and may only be dismissed on grounds of serious misconduct or inability to perform their duties. these provisions imply that the concept of monetary stability benefits from explicit legal protection. a further important benefit of emu is that it has removed the risk of serious real exchange rate misalignments within the euro area. this contributes to economic growth and helps to avoid any misallocation of resources. in fact, it enables the european single market to function smoothly and thereby makes it possible to reap all the rewards, to the benefit of producers and consumers. furthermore, the start of stage three of emu has also eliminated short - term intra - eu exchange rate volatility and exchange rate risks, and has thereby encouraged trade and investment. in addition, the benefits of economic integration afforded by the development of the single market are enhanced by the elimination of the transaction costs of exchanging different currencies, a direct result of the introduction of the euro. while they are difficult to measure, they effectively form an additional layer of protection for domestic producers. the single currency makes prices across the euro area directly comparable, which should increase competition and hence efficiency and economic growth in the area. a number of further positive effects on economic growth flow from the elimination of separate currencies in the euro area countries. one benefit is the potential for the reduction of

action to be taken had not been laid down on beforehand, and denmark clearly lacked the tools to manage the situation. although the size of roskilde bank was not in itself sufficient to make it systemic, the turmoil in the financial markets meant that there was, in danmarks nationalbank ’ s assessment, a considerable risk of a knock - on effect on other banks. in the end, danmarks nationalbank and the rest of the banking sector purchased roskilde bank for zero kroner. in other words, the subordinated capital had been lost, and the private banks provided a guarantee of kr. 750 million to cover further losses. but as it turned out the losses were in fact far greater. a large number of danish banks became distressed in the period around the autumn of 2008. from the beginning of 2008 to the beginning of 2009, 18 danish banks were wound up, acquired or merged with other banks. all of these were small banks. with bank rescue package 3 of september 2010, a bank resolution scheme was established in denmark. the government - owned financial stability company was put in bis central bankers ’ speeches charge of the resolution of distressed banks, thereby assuming the role that danmarks nationalbank had had in connection with roskilde bank. under bank rescue package 3, not only shareholders, but also unsecured and subordinated creditors could lose their money if a bank failed. this was in accordance with international recommendations, but nevertheless caused a bit of a stir internationally, and led to a general downgrading of danish banks. the first bank to be wound up under bank rescue package 3 was amagerbanken – a regional bank based in the copenhagen area. i will not go into detail, but merely note that we now have a mechanism for handling distressed banks which works and which ensures, that taxpayers will not ultimately pay for a distressed bank. denmark was among the first countries to introduce a bank resolution scheme under which those who had lent money to the distressed bank could also lose their investment. this has made headlines, and i am surprised to note that even very small danish banks in distress still find their way to the pages of the financial times. recently it was a very small bank in the south of jutland, tønder bank. in my opinion that is out of proportion. over the weekend another local bank, sparekassen lolland, has been taken over by the larger jyske bank along the same lines, i. e. a private solution. it