European monetary system and european currency

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The euro and the Nordic countries

The Nordic countries have chosen to organise their monetary policy ties to the euro area in very different ways: Finland is the only Nordic country taking part in Monetary Union as from the start of Stage Three; Denmark negotiated an opt-out from Monetary Union but follows a fixed exchange rate policy vis-а-vis the euro within the new Exchange Rate Mechanism (ERM II); Sweden decided not to participate in Monetary Union from the start of Stage Three, without having a formal opt-out and the Swedish krona still floats freely against the euro; and Norway and Iceland remain outside the EU altogether.

The divergent approaches taken by the Nordic countries as regards one of the most important economic and political projects in Europe in modern times are somewhat strange in view of their traditionally close cultural, historical, political and economic ties. Nordic co-operation has always been very important and close. I note with satisfaction that the public opinions in Denmark and Sweden now seem to be swinging in a more favourable direction with regard to future membership. Maybe the successful implementation of the euro has made the public understand that Monetary Union is aimed at ensuring long-term stability in Europe. In this context, the recent signals from the Government of the United Kingdom in favour of membership in the Monetary Union are also very encouraging.

Personally, I think that it would be beneficial to all Nordic countries - and the United Kingdom - to join Monetary Union within the not too distant future. I hope that Sweden and Denmark can become members already before the introduction of the euro banknotes and coins in 2002.

It is important for these countries to also assess the political aspects of remaining outside Monetary Union. Experience has shown that EU Member States which have taken initiatives and worked constructively towards European integration have been generally more successful in gaining influence than those less committed to the project. In this respect, it should be noted that the aim of the Maastricht Treaty is clearly to establish a Monetary Union comprising all EU Member States.

Personally, I also think that the Nordic countries could provide a fruitful joint contribution to the long-term success of Monetary Union. There is no need to overemphasise the role of small countries in this process, but it is clear that co-ordinated views by a group of small countries would have a larger influence than the views of individual countries. One of the benefits of the Nordic countries - and small countries in general - is that they are seldom bound to their old traditional system. In contrast, they typically fight for efficient solutions which would be in the interest of the whole of the euro area.

Concluding remarks

The project to establish European Economic and Monetary Union was carefully prepared and based on very strong political commitment. It has contributed to the co-ordination of economic policies - even in a wider sense - in an environment of deregulated financial markets and the free flow of capital. The stability arguments behind the introduction of the euro have been so well accepted that we are already seeing serious and visible efforts aimed at the next step towards a global "single currency" through the establishment of exchange rate co-ordination between the euro, the US dollar and the Japanese yen. In order for any such world-wide currency co-ordination to become successful, there would be a need for political commitment to globally harmonising fiscal, monetary and structural policies. In this context, I would advise realism, caution and a gradual approach in spite of the longer-term ideal goal of global stability. There are still many challenges and adjustments ahead within the euro area before any world-wide steps should be considered. Our first priority is to ensure long-term stability in the euro area economies under the single monetary policy and on the hope that the euro area will soon cover all EU countries.


Eurosystem: new challenges for old missions

Inaugural Lecture by Tommaso Padoa-Schioppa,

Member of the Executive Board of the European Central Bank,

on the occasion of his appointment as

honorary Professor of Johann Wolfgang Goethe-Universitдt,

Frankfurt am Main, 15 April 1999

Table of contents

1. Introduction

2. Policy missions

3. New challenges

4. Making the eurosystem a central bank

5. Dealing with the European unemployment

6. Managing financial transformations

7. Coping with a lack of political union

8. Conclusion


Реферат опубликован: 12/08/2008