as its predecessors. within the euro area, monetary union has kept member countries from being exposed to harmful intraeuropean exchange rate tensions of the type that many countries used to suffer when external shocks occurred. it has become quite obvious that austria ’ s inclusion in the stability - oriented economic and monetary union has protected our country from negative shocks much more adequately than was possible under past regimes. moreover, the almost four years of emu bear impressive testimony to the fact that the stability - oriented interplay between monetary and fiscal policy provides a solid foundation which was well suited to weathering the economic policy challenges of this period. with the euro the eu successfully supplies an important international public good in the form of a stability anchor with deep and attractive financial markets. this is especially relevant with a view to enlargement of the eu. european integration will only be truly successful if it reaches out to the whole of europe. if the eu manages the enlargement process successfully, this will also be conducive to the eurosystem´s goal to guarantee stability for the whole euro area. such a mutual improvement is desirable in a very broad sense : political stability, financial market stability, macroeconomic and - in the particular interest of the eurosystem - price stability. already today, the euro is a key currency in central and eastern europe. in most of the ceecs ’ monetary policy strategies, exchange rates play a vital role and, wherever they are not a formal or informal intermediate target, they are at least a key monetary policy indicator. it is the euro upon which the ceecs ’ currencies are oriented, or to which they are formally linked. thus, emu and the euro are already an anchor for stability for ceecs. moreover, enlargement will thus extend the zone of stability in europe, strengthen europe ’ s international competitive position and will contribute substantially to prosperity, security and peace in the long term. integration of financial services markets in the eu beyond monetary union a huge amount of work has been undertaken in the eu to improve the functioning of the single market and the international financial system. by abolishing national boundaries and harmonizing different legislations, european integration has fostered the development of a single financial market in europe. but the current regulatory and supervisory framework still strongly relies on national responsibilities. the eu ’ s brouwer report found that there is a need to enhance arrangements for cross - border and cross - sectional co - operation, to improve the alignment of

their nominal anchor currency. the euro also serves as a catalyst for economic reform. among other things, the adoption of a single currency means that member states participating in the euro area no longer have their own national currencies which they can devalue to protect inefficient industries in times of need. instead, other ways must be found to maintain competitiveness, both within the euro area and internationally. i believe it is no coincidence that policy - makers across europe are now focusing more than ever on how to overcome the economic rigidities which, in recent years, tended to hold europe back in terms of economic growth. ladies and gentlemen! but above all, the prime objective of the independent eurosystem is to guarantee price stability in the euro area. and this is what the eurosystem, now also including the bank of greece after greece has joined emu, has done. monetary policy decisions have been appropriate to the prevailing economic situation. the decisions of the governing council of the european central bank ( ecb ) have guaranteed internal price stability. with an average hicp increase of just 1. 1 % in 1999 and 2. 3 % from january to november 2000, the euro area has one of the lowest levels of inflation worldwide. during the last year, the emergence of external upward price pressures and the upswing of the euro area economy have generated some risks to price stability. in a preemptive manner, the governing council of the ecb has tightened monetary policy, thus helping to maintain the favorable conditions for sustained, non - inflationary growth with a positive impact on employment. over the medium term, there are still elements of upward risks to price stability which warrant close monitoring. financial markets have developed confidence in the eurosystem policies, as can be seen from the fact that long - term interest rates in the euro area have remained persistently at, or below, us levels. therefore, the independent eurosystem will stick, in a credible manner, both to its prime objective of safeguarding price stability and to its successful single monetary policy according to the specific needs of the euro area. this was clearly the case, when the governing council of the ecb did not take any action after the fed ’ s surprising interest rate cut by 50 basis points on january 3th, obviously expressing some concerns with a “ soft landing ” in the us. summing up, a lot of progress has already been made. in addition to low inflation, economic growth in the euro area has