the maastricht treaty. the mandate to maintain price stability cannot be seen in isolation. the treaty assigns other tasks to the eurosystem. article 105 requires that the eurosystem “ without prejudice to the objective of price stability … shall support the general economic policies in the community, with a view to contributing to the achievement of the objectives of the community. ” these community objectives include “ sustainable and non - inflationary growth ” and “ a high level of employment ”. but, given the qualification “ without prejudice ”, the treaty also clearly states how the eurosystem shall set its priorities. a contribution to the achievement of the other objectives of the european community can only be made if the eurosystem ’ s primary objective is not compromised. however, there is ultimately no incompatibility between maintaining price stability and pursuing these other objectives at community level. it is by maintaining price stability that the ecb will contribute to the achievement of growth and employment creation. of course, this contribution is a necessary, but not the sole pre - condition. a central bank can set monetary conditions in a way that helps the economy to grow at its potential. even if this condition is met, monetary policy is not enough to reduce significantly the high level of unemployment in europe. this high level of unemployment reflects mainly structural rigidities within the european labour and product markets. this is confirmed by the fact that the european unemployment rate has remained high and broadly stable over business cycles in the past decade. only comprehensive structural reform can therefore remove the underlying impediments to higher employment. in particular, further reforms of the tax and welfare systems are required in many eu countries in order to increase the incentives to create new jobs and to accept them. wage moderation can also have a significant beneficial impact. national governments bear the main responsibility for structural reform designed to enhance market flexibility. i recognise that these reforms may imply difficult political decisions, especially since necessary changes are felt directly, whereas the benefits only become apparent over time. the success, however, of past structural reforms is already visible in those countries where appropriate measures have been implemented and wage growth has been moderate. another argument supporting better functioning labour and product markets is that the monetary policy of the eurosystem is and can only be geared to the euro area as a whole. it can thus not take into account purely national or regional developments. the cyclical positions of participating countries have not yet completely converged, although – with the single currency in place – some national

liquid and integrated capital market, another major prerequisite for the substantial use of a currency by foreign investors is confidence in the long - run stability of its purchasing power. in this regard, internal price stability should provide a sound basis for the development of the euro ’ s external value in the medium term. by maintaining price stability, the eurosystem is contributing to the emergence of a solid and stable currency over the medium term, thereby fostering the euro ’ s international role. conclusions coming to the end of my speech, let me quote mark twain by saying that predictions should be avoided, particularly those about the future. however, there is little doubt that europe ’ s agenda for the immediate and longer - term future will be full of challenging tasks. i have outlined the three areas in which europe will have actively to shape its future : the euro area, the enlargement of the eu and its role at the international level. the fact that these areas are interlinked and that progress will have to be achieved simultaneously adds to the challenges we are facing. from a more general point of view, europe should aim at becoming a stronger partner in international cooperation and, as far as possible, at speaking with one voice. such an ideal cannot be realised overnight, but every effort possible should be made to move in this direction. a stronger, more integrated and coherent europe is in the interests of the world at large. in order to be able to play this role on the international scene, europe should keep an eye on the rest of the world and, in spite of the many challenges it will face internally in the years and even decades ahead, it should avoid adopting an exclusively inward - looking stance.