Debates

Wednesday, 5 July 2000 - Strasbourg

2. ECB annual report

  President. – The next item is the report by Mr Radwan (A5-0169/2000), on behalf of the Committee on Economic and Monetary Affairs, on the 1999 Annual Report of the European Central Bank [C5-0195/2000 - 2000/2118(COS)].

  Duisenberg, President of the European Central Bank. – Mr President, one and a half years have passed since the euro came into existence and the ECB took over the responsibility for the conduct of monetary policy. During this period the euro system, that is the 11 national central banks and the ECB, had to prove its ability to implement the conceptual framework that had been thoroughly prepared during the previous years. It has also had to prove its ability to achieve the goals conferred upon it by the Treaty establishing the European Community.

Looking back, these challenges have been met from both a policy and an operational point of view. Therefore I have great pleasure today in presenting the Second Annual Report of the ECB. It gives an account of the activities of the euro system during 1999 and at the beginning of this year. I consider today's presentation to be an important demonstration of the ECB's accountability vis-à-vis the European Parliament, supplementing the exchanges of views held in your Committee on Economic and Monetary Affairs, in which I participate on a quarterly basis. In addition to this regular dialogue, other members of the Executive Board of the ECB have attended committee meetings on several occasions in order to present a report drawn up under the responsibility of the ECB and to participate in exchanges of views on various issues.

In view of the large range of topics included in the Annual Report it will clearly be impossible to address all of them at our meeting today. Therefore I shall concentrate on some of the most pertinent issues, which have also been raised in the resolution drafted by your Committee on Economic and Monetary Affairs.

Reviewing the first year of the existence of the single currency, I should like to start by reporting that the primary objective of the ECB, that is the maintenance of price stability, has been achieved. Indeed, with consumer prices in the euro area increasing by just 1.1% in 1999, inflation has reached one of the lowest levels in the past 50 years. In line with its mandate, the ECB remains vigilant regarding risks to price stability, as evidenced by its monetary policy decisions in order to nip inflationary pressures in the bud before they materialise rather than to react once price stability is already in jeopardy.

The euro system will continue to pursue this forward-looking strategy in order to maintain an environment of stable prices, which is also conducive to sustained economic growth and job creation in the euro area. I share the analysis of your motion for a resolution that governments should take advantage of the favourable economic environment in order to step up the efforts directed towards consolidating budgets and reducing public debt and go beyond the objectives laid down in the stability programmes. At the same time, structural reforms in the labour product and capital markets should be pursued vigorously. The comprehensive implementation of this policy agenda will contribute to subduing inflationary pressures and thereby support the ECB in accomplishing its tasks.

In your motion for a resolution, you also briefly address the potential implications of a ‘new economy’. I should therefore like to comment on the possible emergence of a new economy in the euro area. Let me start by noting that there are various definitions of the new economy. In my view, the most useful definition is that which characterises the new economy as a phenomenon which increases the growth rate of productivity over an extended period of time. There is some evidence, although this is not uncontroversial, that a new economy is emerging in the United States. By contrast, it is difficult as yet to find clear evidence of a new economy in the euro area.

Of course, there is a need to monitor developments further, with the emphasis on identifying new economic trends and potential structural breaks in traditional economic relationships as early as possible. In any case it is important to stress that for the euro area the achievement of more flexible markets is a prerequisite if the potential gains from new technologies are to be realised in the form of substantially higher productivity growth.

We recognise that a crucial feature of the potential emergence of a new economy is increased uncertainty, particularly as regards the evolution of the production potential and the reliability of indicators which are derived from it, such as estimates of the output gap. In this respect, the euro systems monetary policy framework is well equipped to cope with such uncertainties. It provides the flexibility necessary to address changes in the economic structure with the aim of maintaining price stability over the medium term. By relying on two pillars, the ECB strategy explicitly acknowledges uncertainty regarding the structure of the economy and the transmission of monetary policy within the economy.

In the context of this discussion, some observers have urged the ECB to keep interest rates low in view of the new economy. In response, let me emphasise the following point: the new economy is primarily a supply side story. An inappropriately lax monetary policy would not create better conditions for the emergence of a new economy. On the contrary, by jeopardising the maintenance of price stability, such a policy could seriously endanger the current ability of the ECB. It would thereby undermine confidence, raise risk premia in interest rates and damage the prospects for economic growth and job creation. It is for precisely this reason that the ECB will, in line with its mandate, continue to preserve price stability in the euro area. This ensures that monetary policy makes its full contribution to overall economic welfare while also providing an environment in which the new economy, should one emerge, will be able to flourish.

I should now like to turn to another issue, which has been frequently discussed within the framework of our regular dialogue, namely the issue of transparency. I have already referred to the regular dialogue between European Parliament and the ECB, the transcripts of which are published on the websites of our institutions. Moreover, at the press conferences held after the first meeting of the governing council every month, I present the ECB's assessment of the economic environment underpinning our monetary policy decisions.

You will also be aware of the broad variety of ECB publications, in particular our monthly bulletin, and numerous press releases issued and speeches made by members of the executive board of the ECB. These are also as a rule made available to the public via the ECB's website. This wide range of communication tools, in which the arguments both for and against a decision are presented, is in substance similar to summary minutes. It should also be borne in mind that through regular press conferences and the rapid publication of the transcripts of the questions and answers on the ECB website detailed information about the governing council's reasoning is made available very shortly after the meetings. We therefore avoid the delays that are inherent in the publication of all forms of official minutes.

We always take our decisions from a euro area-wide perspective. This is fundamental to the conduct of a truly single monetary policy. The publication of ECB reports on the economic developments of individual euro area Member States, as is suggested in your motion for a resolution, has to be considered against this background. We clearly do not want to blur the ECB's focus on the euro area as a whole.

The resolution also calls for the publication of macroeconomic forecasts by the ECB. Let me reassure you that preparations for publication continue in earnest. I still envisage that publication of forecasts will commence towards the end of 2000, in line with the statement I made last September at the European Parliament's plenary session on the previous ECB annual report.

I should like, however, to sound a note of caution. Forecasts are only one input into the decisions of the governing council. Forecast publication by the ECB should not be viewed as a panacea which will meet all the communication challenges faced by the ECB as a new institution in a testing multilingual and multinational environment. Forecasts themselves have important shortcomings. For example they are surrounded by considerable uncertainty and they may quickly become outdated if the external environment changes. We are aware of these shortcomings. Therefore, as is made clear in the ECB's monetary policy strategy, monetary policy decisions cannot be made only on the basis of a central inflation forecast. It is the comprehensive analysis of the monetary and macroeconomic situation and the economic disturbances affecting the euro area economy which is the relevant input to forward-looking policy decisions.

The ECB's approach to communication has always placed a premium on honesty. To continue in this vein it is my view that we must publish forecasts in a manner which accurately reflects their limited role in policy decisions and their inherent uncertainties. Any other approach would not be transparent and would therefore be potentially misleading.

I now turn to a related issue, namely the publication of the ECB's economic and econometric models. I should make it clear that the ECB does not rely on a single econometric model but uses an extensive set of models. The results obtained from the models are critically evaluated, using expert judgement. Policy-makers use analysis undertaken using models developed by the ECB staff, in some cases with input from staff of national central banks, as one input among others into their policy assessments and decisions.

The ECB has established a working paper series where technical economic research, produced inter alia under the responsibility of ECB staff, can be reviewed and assessed by the public and external professional experts. The respective authors are responsible for the content of these papers. Therefore they do not necessarily reflect the view of the ECB or of the Eurosystem. Through this and other channels there is a professional dialogue and exchange of views between ECB staff and many outside experts, which is of mutual benefit. Several econometric models have already been published in the working paper series of the ECB. For example, an econometric study of the demand for M3 in the euro area, conducted by ECB staff, was published in September 1999. Other models will be published in the near future. An area-wide model used at the ECB, which models the aggregate behaviour of the euro area economy, will be published in this working paper series by ECB staff, probably at the end of this year or early next year.

I should now like to turn to the contribution of the ESCB, the European System of Central Banks, to the maintenance of financial stability and to prudential supervision. In this regard I should like to mention the Banking Supervision Committee which is promoting cooperation between the ECB, the national central banks and the supervisory authorities of the 15 Member States. The main focus of activity of the Banking Supervision Committee is the analysis of structural developments and the monitoring of potential vulnerabilities in the banking sector.

The Banking Supervision Committee also provides the forum for the exchange of relevant information between the euro system and the supervisory authorities.

Finally, this committee may also act as a forum for supervisory cooperation not related to the tasks of the Eurosystem. The need for multilateral cooperation amongst banking supervisors has increased since the establishment of Economic and Monetary Union, for two reasons. Firstly, EMU has introduced an unprecedented geographical separation between the area of jurisdiction of monetary policy and that of prudential supervision. Secondly, the introduction of the euro itself has fostered further integration of the banking and financial sector. Against this background I perceive the Banking Supervision Committee as the main forum in which multilateral cooperation amongst banking supervisors can be enhanced.

Regarding the issue of cross-border retail payments, which has been raised by the European Parliament on various occasions, I recall that in September 1999 the ECB published a report entitled Improving Retail Cross-border Payment Systems – the Eurosystem's View. The report called on the banking sector to provide substantially improved services by 2002. Since the publication of that report the banking sector has subscribed to the Eurosystem's objectives in principle. It has begun to cooperate closely with the Eurosystem in order to identify the practical impediments to the achievement of these objectives and in order to investigate and, where possible, agree on effective solutions.

I fully share the European Parliament's concern that very little progress has been visible to customers. However, there are strong indications that banks are making considerable efforts to prepare the ground for a more efficient handling of cross-border credit transfers. In particular, progress is under way in the areas of standardisation and simplification of the balance of payments reporting requirements.

The ECB will prepare a further progress report by this autumn in which it will update its assessment. The Eurosystem would prefer to maintain its present stance of cooperation but will if necessary step up the pressure on the banking sector. However, it would be unrealistic to expect the service level for cross-border payments to reach that of domestic payments in all respects by 2002.

I emphasise again that the introduction of the euro has indeed been a milestone in the ongoing process of European integration. The ECB, as the guardian of the single currency, will continue to pursue its stability-oriented monetary policy in order to fulfil its mandate and to deliver the policy results that European citizens rightly expect.

(Applause)

  Radwan (PPE-DE), rapporteur. – Mr President, Mr Duisenberg, ladies and gentlemen, the 1999 report before us from the ECB is both the first ECB report for a full year and also the first report since the introduction of the euro. As has already been mentioned, the stage we are now at is that the euro has already been introduced, but the public will only have the bank notes in their hands on 1 January 2002. Mr Karas will be dealing with that point in detail later on.

However, it is important for us to win the confidence of the public by the time the euro notes are introduced. The increase in consumer prices over the last year of just over 1%, that is well within the ECB target of 2%, provides a good foundation for this. Mr Duisenberg, I would like to sincerely congratulate both the ECB and you personally on that. Because of your stability-oriented policy, the countries in the euro area can boast a historically low level of price inflation.

If the policies of the ECB are to be successful, it must be politically independent. This does not mean that there is no accountability, but rather that a high level of information and transparency is required. I would like to sound a positive note by mentioning the European Central Bank’s regular reports to Parliament’s Committee on Economic and Monetary Affairs, as well as the information published on the Internet, which you have already been referred to.

But a young institution like the ECB has to win the confidence not only of the financial markets but also of the public. I therefore very much welcomed the fact that you addressed the public direct in May, and I think that should happen more regularly. The public is being flooded with information about the euro and I think that the information is not always eye-catching and informative. We need to counter that trend here today. The policy needs to be presented so it can be easily understood, and that would help to win people over to the euro.

At the same time, a low inflation rate is a policy for the economically disadvantaged in our society. That is why it is important for the ECB to tailor its decisions to primary objectives. For example, as I see it, we cannot accept an inflation rate of over 3.3% simply because it makes it easier to achieve secondary objectives such as economic growth and employment policy. Those who are disadvantaged suffer particularly from creeping inflation, which I therefore regard as being socially unacceptable.

The areas of economic growth and employment are primarily a matter for the Member States. This is exactly the reason for part of the weak external value of the euro. We need to make greater progress with reforms such as flexible labour markets, restructuring social security systems and liberalising financial markets if we are also to make the euro area more attractive as a financial centre and as a centre for investment. Mere declarations that we want to become number one in the world economy, like the one made at the Lisbon Summit, are not enough. The Member States have got to take action themselves here. That is why the objective of debt reduction and balanced budgets needs to be achieved as quickly as possible.

But it is also important for the European Central Bank not to completely forget about the external value of the euro. On the one hand there is a risk of higher prices, of importing inflation, which is at present being aggravated by higher oil prices of course. On the other hand, and this brings me back to the subject of ‘information and the citizen’, many people see the external value of the euro as an indicator of how stable it is. With this in mind we must make sure that this factor alone, external value, does not weaken confidence in the euro.

I accordingly welcome the most recent correction in interest rates, that is the increase by 50 base points, as a step towards a medium-term monetary policy with a view to creating confidence and calm both in the financial markets and amongst the public.

Another sign in the eyes of the public that the euro is a good thing would be a marked reduction in charges for cross-border payment transactions, which you have already mentioned. In this case I believe it is important for the banks to set their sights far higher and make more rapid progress. For banks simply to refer to the standardisation of systems is not enough here. The introduction of the euro did not come overnight and it was not a surprise. I myself come from the world of information and communications technology. I know that if you put a subject right at the top of your agenda and really put some pressure on, you can get something done more quickly. I therefore call on you to get the European Central Bank to add to this pressure, so that our banks make greater efforts in this field.

Lastly, I would like to talk about the imminent eastward enlargement of the European Union. First, I would like to make it clear that I am not talking about a treaty amendment, as was now and again suggested during the debate. What I have in mind is to examine the process ahead of us. No one is disputing that there is a three-stage process, from EU membership, to participation in the exchange-rate mechanism, and finally to full membership. However, a minimum level of economic convergence is needed to achieve this, and also to create a level playing field for the applicant countries and the present EU Member States.

It is important not only to observe the criteria, but also to allow some leeway with regard to this compliance with the criteria. We cannot allow decisions that we have made in the past to keep tying our hands when it comes to the present and future process, over a period of five to ten years. We must maintain this process – this scope for interpretation.

In conclusion, I would like to thank all my colleagues and the committee secretariat very sincerely for their support with this report.

  von Wogau (PPE-DE). – (DE) Mr President, Mr Duisenberg, ladies and gentlemen, first of all I would like to congratulate our rapporteur, Mr Radwan, on the excellent report he has presented here. And I would like to thank you, Mr Duisenberg, very sincerely for your report as President of the European Central Bank.

The thing that has particularly agitated the public during the first 18 months of the euro’s existence has been the exchange rate against the dollar. The ECB itself eventually had to pay some attention to this question, because there started to be a risk that imported inflation would become a reality here in Europe. What caused this initial drop in the exchange rate? We have to recognise that the international financial markets noticed that we in Europe have been slow in tackling some of the structural reforms needed.

Secondly, the euro is a new currency. A new currency has to win the confidence that other currencies already enjoy. Thirdly, there was a not inconsiderable gap between our interest rates and those in the United States, which meant that investors felt more inclined to invest in the United States than in Europe.

It also has to be recognised that the ECB’s policy has very consistently been different from that of the US Federal Reserve Bank. In this case, the guidelines Mr Duisenberg has been operating under are not the same as Mr Greenspan’s. For example, in the United States the inflation rate has topped 3% in recent months, without the Federal Reserve Bank taking any special countermeasures. Over here, the upper limit is set at 2%, and for very good reasons. I would like to congratulate you, Mr Duisenberg, on having pursued a very consistent stability policy, and on having given a very clear signal when the ECB made its most recent decision on interest rates. You spoke just now about new technology, about the new economy. The objective of the European Central Bank will remain the same, even with the new economy, and that is to maintain price stability.

(Applause)

  Goebbels (PSE). – (FR) Mr President, Commissioner Solbes Mira, President Duisenberg, ladies and gentlemen, I should like, if I may, to deal swiftly with various questions in relation to the work of the European Central Bank.

First, the 1999 annual report. I think we need to acknowledge that the Central Bank did a good job in 1999: inflation remained very low, providing the euro with a high degree of stability, and our citizens' purchasing power remained the same.

We should also, I think, congratulate President Duisenberg and his team for the smooth introduction of the euro as bank money. I think that was an achievement which deserves to be highlighted.

As far as the current year is concerned, the figures are not quite as pleasing. Inflation has risen again, driven by the increase in oil prices. The Central Bank has responded by tightening credit terms, not that rates are currently overly high in Europe. Nonetheless, the Central Bank's strategy has not always been completely clear or highly legible.

In fact, there have been a lot of copycat decisions between the European Central Bank and its big sister, the Federal Reserve in the United States. When the Federal Reserve hikes its base rate by 25 points, the European Central Bank follows suit; when the Federal Reserve adds 50 points, the Central Bank does likewise a few weeks later. But the situation in the United States is quite different from the situation in Europe and sometimes I get the impression that the European Central Bank is giving in slightly to market expectations and appeasing the markets with increases of 25 or 50 points and I worry somewhat when I read reports by financial analysts predicting increases of over 100 points by the end of the year.

Inflation is there, sure enough, Mr Duisenberg! But I note that it is falling and I do not therefore think that waiting for the markets is the right approach. You are there, Mr Duisenberg, to serve the entire European economy, not to serve the financial markets, and I must say that the European Central Bank has been most discreet so far on the subject of the blatant irrationality and permanent casino atmosphere of the financial markets. I have just listened to a statement by Mr Issing, criticising the sheep-like behaviour of the financial markets, especially in connection with the relative weakness of the euro. I think that this weakness is, indeed, completely relative and that we should not read too much into these fluctuations, even if they do relate to our economy.

I hope to see better coordination between European policies. I want a stronger European economy, not in opposition to, but in cooperation with the Monetary Fund, on the understanding that each of them retains its freedom of decision and action.

Mr President, unfortunately I have run out of time and I would like to have said a great deal more, especially on enlargement. Allow me to say just two words on Mr Radwan's comments. Every country which is to join the European Union should be a member of the Economic and Monetary Union. We want to apply the Treaty, but the whole Treaty and nothing but the Treaty.

My final word, Mr President, is this: if I had to write a report for Mr Duisenberg, it would say ‘good, but could do better’.

  Huhne (ELDR). – Mr President, I would like to congratulate Mr Duisenberg on a successful year in running euro monetary policy. Clearly what matters is internal price stability, and the external value of the euro is of much less significance. Indeed that was one of the reasons for creating the euro in the first place: it was precisely to protect the European economy from the volatility of the foreign exchanges to which Mr Goebbels has just referred.

I am particularly pleased, too, that Mr Duisenberg has reiterated his promise to publish forecasts and econometric models, and I entirely understand his caveats. I hope that when he publishes the macroeconometric model he will do so in a form which makes it available and easily usable by outside researchers, perhaps on CD-ROM.

However, in connection with Parliament's view of last year I would urge Mr Duisenberg to reconsider a formal framework for the publication of summary minutes. As he said, much of the debate which happens within the Council is filtering out in the form of discussion within the monthly bulletin, but this is not the same as a regular report with a formal framework in which it is discussed. That would help anchor expectations within the market, as well as fulfilling the important accountability mandate of the ECB.

It is also clearly crucial the ECB should look only at the euro zone as a whole in terms of its inflation and price stability objective. It is essential to point out that different growth trends exist within the different national components of the euro zone economy, and that this implies different sustainable wage growth rates over time. That is why it is important that there should be an overall discussion of what potential sustainable growth rates of wages are in each of the component parts of the euro zone economy, and why this will actually help deliver low inflation combined with low unemployment.

Those are the main points I would like to make. I would also very much like to back Mr Goebbels' remarks about the importance of enlargement, namely that we should not have two standards – one for us and one for them. I very much hope that we will continue to apply the criteria of the Treaty, no more and no less.

  Lipietz (Verts/ALE). – (FR) Mr President, ladies and gentlemen, I do not intend to re-open with Mr Duisenberg the debate which we held in committee a while back.

The Group of the Greens totally disagrees with the policy of raising interest rates, which has been applied since the end of 1999. We are as displeased by the second period of management by the Bank, starting in the last quarter of 1999, as we were satisfied with the first, not because the Bank overestimates the importance of variations in exchange rates against the dollar – it does in our view, but that is by the by – but because the debate on exchange rates obviously masks the Central Bank's aversion to growth and its serious underestimation of the potential rate of growth of the European Union. Yes, there are difficulties with a rate of growth of 3% but these difficulties imply that there should be more, not less investment and, hence, lower not higher interest rates.

What I would like to stress today is the scandal that is the second part of paragraph 11 of the Radwan report. To dare to say that the French 35-hour law is responsible for the fall in the euro because it has weakened European competitiveness overall is an intellectual lie, pure and simple.

It was after this law was announced that the Toyota factory – and many others – decided to open in France. If the MEPs consider that the Toyota factory does not know what it is doing, that is their right; that these MEPs claim to suggest such absurd rules to national governments and European social policy, frankly, seems to us...

(The President cut the speaker off)

  Theonas (GUE/NGL). – (EL) Mr President, the European Central Bank report under discussion covers 1999, its first year in operation following the start of the third stage of EMU and, for this very reason, the European Parliament's criticism of the European Central Bank's annual report should be even stricter and even more demanding. The European Parliament is the only institution in the Community which is entitled to exercise any, albeit ex-post, control over the European Central Bank and its policy. From this point of view, the report by the Committee on Economic and Monetary Affairs does not meet the expectations of the citizens of Europe, in that it fully supports the policy of the European System of Central Banks and, on several counts, is going beyond that policy by calling for even greater liberalisation. The claim that the international standing of the euro and its weakness against the dollar are due to delays in making the necessary structural changes at the expense of the job, goods and services markets and to delays in advancing on the public sector of the economy, dismantling employment relations and abolishing the labour, social and insurance rights of workers has caused a public outrage.

In its quest for much-vaunted monetary stability, which I consider to be its only duty, the policy of the European Central Bank has been highly contradictory; in pursuing a single objective, i.e. to control inflationary pressures, it has swung like a pendulum from one extreme to the other, with successive reductions and increases in the interest rate which, in the final analysis, have had acutely negative repercussions on growth in productivity and employment.

The workers paying the price for this seriously negative neo-liberal policy have no confidence in it, nor do they share the European Central Bank's ambition or the support given to its policy by the European Parliament, the other institutions of the European Union and the governments of the Member States. The much-vaunted new economy will certainly not serve the interests of the workers. In this sense, we oppose both the policy of the Bank and the support given to it by the European Parliament.

  Abitbol (UEN). – (FR) Mr President, I should like to thank Mr Radwan for the quality of his report on the first financial year of the Central Bank since the introduction of the euro. His efforts are commendable. One senses a diffuse anxiety seeping through his report which contrasts happily with the steadfast optimism of the various advocates of the euro, together with reaffirmation – somewhat timid but reaffirmation nonetheless – of a few basic principles, all of which are superfluous. Mr Radwan will go down in history for having reminded us that the independence of the Central Bank is not to be equated with accountability but, on the contrary, implies maximum transparency, mainly in order to make up, he should have added, for its lack of legitimacy.

Alas, Mr Radwan, you see all the symptoms, but you cannot bring yourself to name the genetic disease afflicting the euro and provoking the scepticism of the markets, which have devalued it by 20%, indifference on the part of the economic players, who have yet to adopt it, the distrust of the citizens: in the last survey, 41% of Europeans already thought that the euro was a bad thing for them and, admit it, there were signs of panic among the euro supervisory authorities, 18 months before the planned withdrawal of the national currencies. Add to that the increasing hostility of the British and the persistent distrust of the Danes, which I hope to see confirmed on 28 September.

The initial cause of the punishment currently being inflicted on the European currency stems, of course, from the conditions in which it was born. Conceived in haste by France and Germany following German reunification, followed by nine other countries, the so-called single currency was immediately put out for adoption by the political authorities to an independent bank, poor little Cosette sent to the Ténardiers in Frankfurt! One can understand why the child is sickly, under the circumstances.

According to the Cardinal of Retz, in politics, you often end up with the opposite of what you were seeking. It is the independence of the ECB, advocated in order to reassure the markets, which is worrying them. The Federal Reserve was born when the United States was over a century old and after the American Civil War and it acts not totally, but relatively independently within what I would call a single pool of feelings, i.e. within a single country. With no such foundation, the Central Bank is not independent, it is isolated. Its message is doomed to failure. It can only speak the language of the markets, what one French journalist calls eurodosh, not the language of the people, as a result of which the euro is merely a currency of loans which has become the toy of the markets instead of being the business of the Europeans.

Perhaps your euro will rally, Mr Duisenberg, but it will not be thanks to you. It will be because the dollar has fallen. So, for pity's sake, between now and then, do not out of wounded pride throttle a European economy which has already paid a heavy price in the chase for the euro in terms of growth and employment throughout the 1990s and which does not want to pay a second, equally heavy price in the chase for a strong euro. If you do, then do not complain if governments come running back and fight you for your premature independence and illusory sovereignty or, in other words, if Jean Valjean finally comes and takes Cosette away from you.

  Della Vedova (TDI). – (IT) Mr President, President of the European Central Bank, Commissioner Solbes, on behalf of the Italian Radicals of the Technical Group of Independent Members, I believe that the objective which the European Central Bank set itself – which is the objective enshrined in the Treaty and in the best economic doctrine, that is to curb inflation – has in actual fact been achieved. This can only be reason to applaud the activity of the Central Bank itself as well. However, we cannot allow this result to distract us from the many storm clouds gathering overhead.

The first issue is public finances: improvement in the relationship between public deficit and GDP, which, in the space of a few years, has fallen to below 2% in the euro area, disguises the fact that, in many countries, in many instances, this result is due purely to favourable interest rates and to the fact that taxation has risen instead of fallen.

The long-term structural reductions in public spending are of secondary importance and, moreover, the national budgets of many countries remain at around 50%, which is too high a level to control without risk of adding to the deficit in the event of crises or shocks.

In particular, the question of the hidden debt must be raised urgently – and in this regard the Central Bank could and should make a far greater contribution than it does at the moment. This debt arises from the public pension systems in many countries, particularly but not exclusively in Italy. The demagogic generosity of these systems has a very high cost which someone is going to have to pay very soon, and its effects will soon make themselves felt on the stability of the euro.

There is the problem of transparency in European Central Bank decisions: something has been done about it but not enough, in my opinion, and on this matter I refer to the words of Mr Huhne, with whom I am in complete agreement.

President Duisenberg stated – and I agree with him – that the problem of the new economy, the late arrival of the new economy in Europe and of the productivity of labour in Europe is not, cannot and must not be treated as an interest rates issue. It is a question of structural reforms and must be dealt with as such.

There is a problem of privatisation and liberalisation in many sectors. There are countries such as France – large countries therefore – which have put the brakes on with regard to the liberalisation and privatisation chiefly – but not exclusively – of the telecommunications sector.

There is the problem of the flexibility of the labour market. Mandel, one of the forces behind the euro, when speaking of Europe a few months ago, said that the governments are making the market too rigid. Hiring and firing must be liberalised, for the simple reason that controlling dismissals only serves to limit the possibility of hiring new staff.

Instead of expecting Central Bank policy or taxation policy to resolve some of the problems of the European economy, European policy should resolve the issues it is able to, such as the issue of restructuring and flexibility in the economy and in the labour market, immediately.

I will end by thanking Mr Radwan for this excellent report and say that I agree with the greater part of its content.

  Brunetta (PPE-DE). – (IT) Mr President, Mr Duisenberg, Mr Solbes, I share the satisfaction Mr Radwan expressed in his report regarding the importance of the objective of maintaining price stability, which the Central Bank achieved by bringing the rate of inflation in the euro area down to minimal levels.

Furthermore, I share the rapporteur’s satisfaction in noting that the ECB has stood by its commitment to publish information regularly on the financial variables in its possession, the economic forecasts and the econometric models used as the theoretical basis for the monetary policy it has implemented. It is important that the principle of transparency is affirmed and it is a good thing that the ECB has set communication standards which could be an excellent point of reference for the activity of the central banks of the individual countries.

However, let us guard against interpreting the principle expressed in Article 105 of the Treaty too freely, for Article 108 reads: “When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and the Statute of the ESCB, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, … or from any other body.”

The monetary policy is certainly a lever which is capable of determining a country’s economic performance, for better or for worse, but it is for this very reason that we must not give the ECB responsibilities which cannot fall within its remit, either under the Treaty or in the light of the basic rules of economic policy.

The poor development of the macroeconomic variables in some of the countries of the euro area has been linked, very superficially but incorrectly, to the creation of the single currency: imbalances and unfavourable trends in some countries cannot be blamed upon the euro and still less upon the Central Bank’s monetary policy, but they can be attributed to the absence of an unambiguous economic policy in Euroland and the lack of structural reforms at the level of the individual national systems.

(Applause)

  Randzio-Plath (PSE) , chair of the Committee on Economic and Monetary Affairs. – Mr President, Mr Duisenberg, Commissioner, ladies and gentlemen, it is ten years now since the inception of monetary union. Today we are reviewing an annual report based on a successful monetary policy. In institutional, organisational and monetary policy terms, the European Central Bank has acted prudently while showing the way forward, even if not everyone would agree with all the decisions made by the ECB.

However, more could be done to improve the transparency of monetary policy. This is not just a question of improving communication, it is also a matter of providing clearer explanations. That is why I am pleased, Mr Duisenberg, that you have today promised once again that we will get inflation forecasts and that progress will be made with publishing the econometric models. And of course I would still like us to see the summary minutes of meetings, so that we can follow all the arguments.

The annual report states very clearly that the euro has made its mark at international level and is already the second most important currency in the world. The report also clearly emphasises that the European Central Bank has achieved its priority objective of ensuring price stability.

However, it seems to me that the ECB’s secondary objective is not yet totally clear to everyone. After all, the rate of inflation is low and under control despite the increase in oil prices. This is very different to the situation prevailing at the time of the oil crisis in the 1970s. The ECB must therefore finally make it clear how and subject to what conditions it intends to support the Union’s economic policy and the objectives of achieving economic growth and employment. After all, money exists to serve people, and not the other way round. For that reason support is needed for the macroeconomic framework, and the ECB has a role to play here.

As yet, the ECB has still not provided an explanation as to why price stability is more strictly defined in the euro area than in the US, and why it does not provide greater protection for the fledgling European growth process. Europe needs a sustained period of high growth if we are to successfully combat unemployment. After all, full employment is once again a possibility at last. An ECB stability-oriented monetary policy has every chance of giving an impulse to investment and growth, and thus making a real contribution to achieving an appropriate and properly balanced policy mix.

What contribution can the ECB make, and does it intend to make? Why does it not follow the example set by the US Federal Reserve Bank in supporting the upturn in the economy? Or could it be – and I would like an answer to this – that the European Central Bank is opposed to growth rates of over 3% because it thinks they could jeopardise its stability policy?

  Riis-Jørgensen (ELDR). – (DA) Mr President, Mr President, Commissioner, ladies and gentlemen, first of all, I should like to thank Mr Radwan for a splendid report. Pages 60 and 61 of the ECB’s annual report contain a discussion of the situation in Denmark in 1999. It is pointed out that, in 1999, the Danish krone was stable and marginally stronger than the central rate in ERM 2. This situation has, unfortunately, changed because there has been pressure on the Danish krone in recent months. Speculation against the Danish krone is occurring primarily because Danish opinion polls suggest that there may be a ‘no’ vote in the forthcoming referendum on 28 September. If there is, in fact, a ‘no’ vote in this referendum – and I very much disagree with my French colleague who has just spoken and who, if I understood him correctly, is hoping for just such a vote – then speculation against the krone may be expected to increase, in which case Denmark will have need of that ECB support in defence of the krone which is provided for in the ERM 2 agreement. I would therefore ask you, Mr Duisenberg, to clarify what the limits will be for the Danish ERM 2 agreement and to answer the following questions. Firstly, what conditions must Denmark fulfil before the ECB will intervene in support of the krone? Secondly, how much in the way of foreign reserves will the ECB, in practice, spend on buying up kroner in order to support and defend the Danish currency? Thirdly, for how long a period will the ECB be prepared to support the krone? And fourthly and finally, can you tell us whether the ERM 2 agreement is to be in force for an unlimited period of time?

  Brie (GUE/NGL). – (DE) Mr President, no one denies, Mr Duisenberg, that you and the European Central Bank are operating a very competent and successful monetary policy. Nevertheless, people’s concerns about the euro’s low exchange rate need to be taken far more seriously, because it is one of the root causes of inflationary trends and higher interest rates. However, the real and very fundamental criticisms I want to make relate to other areas. The report welcomes the improvement in the ECB’s information policy. Yet we are refused the information we really need – publication of the minutes of meetings – on the grounds of the ECB’s independence. But the ECB is not privately owned. It should be fully accountable to the people who own it, the citizens of the European Union. It is one of the European Union’s most powerful institutions and this complete surrender of policy and democracy to the ECB cannot continue.

There is a second problem that worries me.

(Heckling)

Yes, and why not? There is a second problem that worries me. This narrowing of monetary and financial policy down to price stability is reflected in paragraph 9 of your report, Mr Radwan, where the rather revealing wording states that developments in labour markets and social security systems should support the ECB’s stability policy, rather than the reverse, which would be more appropriate in view of the dramatic problems in these fields.

Lastly, I wish to raise a third question, which I will at least touch upon. There is not a word in the report about the unparalleled over-expansion of international speculative financial markets. In my view, this will result in inflationary trends in the medium term, and at present it is the cause of a totally unacceptable shift away from companies dependent on labour and real economic factors and towards speculative profit making. I hope that it will at last be possible to have a serious and essential debate with you about this trend and about instruments capable of influencing it, such as the Tobin Tax.

(Applause)

  Karas (PPE-DE). – (DE) Mr President, Mr Duisenberg, ladies and gentlemen, I think that the Radwan report is particularly important, because it cannot be read in isolation from the next item about the euro information campaign. I am glad that 11 of my 12 amendments were accepted in committee. I had three principal aims in mind with those amendments.

Firstly, to enhance and underscore the independence of the European Central Bank. To my mind, this independence also implies freedom from instructions, and this is justified because the ECB has a clear remit, which is to maintain price stability. My second aim is to call on the ECB, through this House, to continue to pursue its stability policy so as to ward off the increasing risk of inflation. My third aim is to give a signal to all the applicant countries that membership of EMU is conditional not on political concessions, but on meeting the convergence criteria.

So this report is also important as regards the information campaign, as I have already said, because the media’s overemphasis on the euro’s external value, which has a psychological impact on public confidence in the single currency, needs to be countered to a greater extent by the demonstrable success of economic and monetary union, to which everyone must give greater prominence.

We must not allow information on the technical changeover to be overshadowed by information about the political objectives and the successes achieved so far.

By way of conclusion, I would therefore like to say that the euro, as this report demonstrates, is a project for growth and employment, for a successful single market and for enhancing Europe’s identity. The euro is a project for price stability and lower inflation rates, for increasing competitiveness and improving public finances, so that we finally put a stop to the process of selling out our future for budget policy reasons.

  Κatiforis (PSE). – (EL) Mr President, the first annual report by the European Central Bank gives us a chance to thank the executive board of the European Central Bank for its hard work and to congratulate it on its successful administration in connection with the introduction of the euro. Theirs was no easy task. These people worked extremely hard to attain our common objectives and we should acknowledge that, even if we disagree with them on certain crucial points of the monetary policy which they have applied over the year in question.

The points on which we disagree, and which the rapporteur has glossed over or failed to mention in his report, do not, in my book, include the criticism which has been voiced on account of the fall in the exchange rate of the euro. The rapporteur quite rightly reminds us here that the fluctuations in the euro's predecessor currencies were far greater than those recorded so far for the euro, so there has been no deterioration there. The rapporteur ascribes the fall in the exchange rate to a lack of dynamism within the European economy and he is probably right. However, his comment raises the question of the extent to which the monetary policy applied for a year or more is the right policy for restoring the dynamism which we all agree the economy needs.

Unlike the rapporteur, who fully endorses the arguments of the Central Bank, many of us believe that its monetary policy has been dogmatic, excessively conservative and prone to inflationary risks. We could even forgive it all that, because conservatism and perhaps even a little dogmatism go with the job of central banking. But the Central Bank has no right to publicly present the fight against inflation, which is its obligation under the Treaty, when it itself is free to define inflation as it pleases. The Bank cannot tell us, ‘We have put an end to inflation and inflation is what we say it is, what we judge it to be, and we judge it in a subjective and arbitrary manner, in isolation from the rest of the economy and, more importantly, in isolation from support for employment, which is also the obligation of the European Central Bank’.

This attitude towards economic policy verges on the dangerous, especially nowadays. Economic recovery in Europe has mopped up all our spare productive potential and needs new investments if it is to continue. Is the recent increase in interest rates on the pretext of the risk of inflation the most suitable policy for encouraging investment? Can the inflation target of 0% to 2% be reconciled with the need to extend the investment economy or should the twelve countries in the euro zone be considering a political revision of the inflation target, in which case the Bank will be able to pursue a target independently, but the target will be set by and will be the political responsibility of the European governments?

  Boudjenah (GUE/NGL). – (FR) Mr President, whatever the value of the euro, the primary objective of the European Central Bank, as you have reminded us, Mr Duisenberg, is to maintain price stability without worrying about the economic and social consequences which come in the wake of these decisions.

That is why the ECB can increase its interest rates, at the risk of slowing down investment and dampening growth. This hike follows on from the increase in American rates. The persistent weakness of the euro against the dollar is also the result of the huge drain on capital leaving the European Union. According to experts, nearly 950 billion French francs net poured out of the euro zone in 1999 in the form of direct investments abroad, i.e. 43% more than in 1998.

In short, the euro is used mainly for borrowing in order to finance speculative projects, even as far away as the United States. The decision to compete with the United States by promoting the financial markets leads up a blind alley. It needs a boom in employment, training, research and salaries to enable us to develop a resolutely modern European social model.

To do so, social and monetary sides must join forces. But the ECB is the only master on board when it comes to monetary policy. In the name of the fight against inflation and strict compliance with the Stability Pact, it even goes so far as to call the governments of the Member States to order, but never has a word to say in criticism of the speculation sweeping the financial markets. It advocates wage restraint, flexibility and job insecurity. It fans the flames of privatisation in order to boost competitiveness and the return on capital. It also advocates ‘modernising’ social protection and reducing unemployment costs, thus applying the same logic as the agreement in France between employers and two trades union, an agreement which punishes the unemployed and makes them feel guilty.

We must re-open the debate on the remit of the European Central Bank in order to find a new credit policy which takes account of employment criteria. We cannot merely tack a social chapter on to neo-liberal economic policy. The alternative in a truly social Europe would be to substitute a growth, employment and training pact for the stability pact. And if we are to implement this approach, it is vital that we strengthen control of the ECB by the European Parliament and the national parliaments.

  Lulling (PPE-DE). – (DE) Mr President, when it adopted the Radwan report, the majority of the Committee on Economic and Monetary Affairs missed a rare and valuable opportunity to draw attention to reasons for the weakness of the euro that cannot be laid at the door of the European Central Bank. The sheer nonsense that we have heard here demonstrates how important the ECB’s independence is. The argument that the euro’s weakness is also a consequence of Euroland’s enormous bureaucracy, which – in the words of acknowledged experts – has a Socialist tendency and limits individuals’ freedoms, was rejected by a majority of the Committee on Economic and Monetary Affairs for clearly ideological reasons. The same fate was suffered by other amendments to the effect that the euro area is totally overloaded with heavy taxes, thus penalising entrepreneurialism.

Rigid structures, the slow pace of liberalisation in important sectors of the economy and differences between inflation rates in individual euro Member States, which are already a cause for concern, are the reason why the improvement in public finances in many Member States is not the result of a sustained reduction in public expenditure and structural reforms, but rather a consequence of low interest rates and a heavier tax burden, which represent a threat to the Stability Pact. I would like to have seen all these points included in the report. It would also have been a good thing for this Parliament if it had had the courage to recognise in this particular report that the present weakness in the single European currency is chiefly due to a lack of economic flexibility. Nevertheless, I am glad that at least some reservations have been voiced about certain decisions taken recently in the euro countries, for example on working hours, which instead of making the labour market flexible have made it rigid, and are also contributing to the euro’s weakness. I do not mind saying this, even if Mr Brie, the chief ideologist of Germany’s old communists, whose party wrecked a whole state and who would do better to keep quiet here, does not like it.

This is an unequivocal signal to voters in the euro area to give the all too numerous Red-Green governments their marching orders, if they…

(The President cut the speaker off)

  Berès (PSE). – (FR) Mr President, Mr President of the Central Bank, Commissioner, ladies and gentlemen, I cannot resist the temptation of replying to Astrid Lulling. Independence, yes, but independence in relation to what? If you think that the reduction in working hours might explain the fall in the euro, then that is your business, but it seems to be the result of ideological prejudice rather than objective observation of the state of the French economy.

(Applause)

Mr President of the European Central Bank, as you know, the recent 50-point increase in the base rate which you introduced, following hard on the heels of the increase at the end of April, has incited widespread debate in numerous Member States in which growth has resumed; it is feared that this increase in the base rate will upset this trend, which is essential if we want to resolve the problems facing our fellow citizens.

However, we are delighted at the prospect of a revision in the reference value which allows growth in the money supply to be evaluated. This revision would appear to be overdue. As for the deterioration in the exchange rate between the euro and the dollar, not everyone sees it as a drawback, but many wonder as to the causes. Allow me to share my conviction with you. The lack of any real coordination between our economic policies is the main cause. If we want to rectify this situation, we need greater coordination between our economic policies and we will not achieve it unless we strengthen euro 11, or rather euro 12. It is within this framework that you will manage to strengthen the mutual confidence between governments which is needed if progress is to be made in this direction. I hope that the French presidency will succeed in pushing this issue forward. I also hope that the Central Bank will help it to do so in a positive spirit.

Progress has been made as regards transparency and we are delighted about that. You know that this Parliament imagines that we can go further still. And then, Mr President, allow me to question you on one final point. You have called on the trade unions for wage restraint, as is your right. But should you not also question the inflationary trends triggered by the huge profits made on the share markets? We think that there is also a global vision of the economy which you would do well to take into account.

Finally, as far as Mr Radwan's report is concerned, I cannot concur with the idea that speeding up structural reforms would bring about a fall in the euro when it comes to reducing working time. Once again, the figures speak for themselves: as a result of the reduction in working hours, there has been an increase in growth and jobs in the French economy.

(Applause)

  Bordes (GUE/NGL). – (FR) Mr President, the European Central Bank is just a cog, albeit a highly symbolic cog, in the wheel of policy of all the Member States of the Union, a policy which promotes the profits of big business, while at the same time imposing what the report euphemistically refers to as a moderate wage policy.

The Central Bank, which has set itself up as the supreme guardian of this policy, claims to be acting to prevent budgetary deficit and indebtedness in the Member States. But what it does not mention, any more than the Member States themselves, is the fact that those responsible for and those who benefit from the deficit are not those who are required to make sacrifices in order to reduce it. It is the subsidies, tax relief and various forms of aid granted to big business which empty state coffers everywhere. But it is to labour and public-sector wages that every government runs when it comes to reducing its deficit.

The elected members of Lutte Ouvrière will be voting against this report. We affirm the need for a policy to put an end to all direct or indirect subsidies to employers and a consequent increase in taxes on profits, private wealth and high incomes.

We affirm the need to force Member States to use the funds that are recouped in order to create jobs, which are cruelly lacking today in health, education and public transport, and to lift the public services out of their present state of disrepair.

IN THE CHAIR: MR IMBENI
Vice-President

  Kauppi (PPE-DE). – (FI) Mr President, having listened to Mrs Berès and Mrs Bordes I am more worried than ever that the fine talk at Lisbon is actually being realised. There does not seem to be any understanding among the communists and socialists of the concern Mrs Lulling and the EPP Group have regarding how European competitiveness and dynamism can be realised. I wish that France and the French Members of Parliament were as active, for example, in the implementation of the action programme relating to financial services, as they are in promoting the Social Agenda. President Chirac yesterday emphasised with eloquence the importance of finding the right balance between these two objectives, and I wish you would listen to your President.

Mr Duisenberg, I remember last year’s discussion on the 1998 annual report very clearly. Then I pointed out Parliament’s wish to see a strong and independent European Central Bank in the future, one that was well established and had gained the confidence of the market. The report we are now dealing with also shows that progress was clearly made in this direction last year. It is to be welcomed that the ECB is committed to regularly releasing its economic forecasts and details of its econometric models of the Euroland economy. There has to be more transparency, however. Mr Duisenberg, the fact that there are many econometric models does not prevent their all being published and made known to Parliament also. It is important that these models, on which we try to decide money policy in a new economy, with all the circumstances of a new economy, are published openly in order for economists and politicians to discuss them.

I agree with Mrs Riis-Jørgensen that the ECB should explain its policy of intervention. This morning on the CNN news channel they presented some results of research regarding various intervention policies by the ECB, and the ECB came across as a good intervention-focused bank. Could you comment on that later on in your reply?

  Tannock (PPE-DE). – Mr President, the Radwan report has addressed honestly many of the issues which relate to the functioning of the Central Bank, ranging from prudential banking supervision and the cost of international money transfers on the one hand, to convergence requirements for applicant countries and the role of this Parliament in providing the framework for the accountability of the ECB on the other.

I welcome the calls for greater transparency which I consider is the bank's best defence against calls to amend the Treaty to reduce its operational independence, and Mr Duisenberg has undertaken to publish the econometric models, for which he should be congratulated. I would also urge publishing the minutes and the voting patterns of the Governing Council, as winning the trust and the confidence of the markets is vital, especially for such a young institution.

The report welcomes the fact the ECB does not interpret its responsibility for stability policy one-sidedly, but that, in addition to inflation, it also monitors deflationary tendencies. This is also important. We all value economic and price stability, and the new paradigm in the United States gives us hope that such stability, including a balanced budget over the economic cycle, is consistent with growth and the steady reduction in unemployment.

The report, however, does not examine the markets' lack of confidence in the euro and the huge capital outflows from Europe over the past year. I believe this is due to the lack of faith in the core Euroland countries' ability to govern and deliver fundamental structural reforms under their current governments, which Otmar Issing, the bank's chief economist, has referred to as the serious structural rigidities in Europe's labour markets and pensions systems.

Lastly, as a British member, I do not think it is fair that candidate countries should be subject to any stricter application of the Maastricht convergence criteria for joining EMU than the existing members and, as an out-country member, I urge the Commission to consider the flexible European model that we British Conservatives have adopted, allowing these countries to opt out of EMU in future if they so wish after joining.

  Agag Longo (PPE-DE). – (ES) Mr President, Mr President of the European Central Bank, good work! I believe that you have achieved the main objective of the European Central Bank: to maintain price stability. I will go further. If necessary, if you believe it appropriate to raise interest rates, if the objective is price stability, if the inflation objective is in jeopardy, do not be nervous, raise interest rates.

However, I would like to add something. It is not in this area that the European Central Bank deserves most credit, but rather it is in the debate on the external value of the euro that the European Central Bank has remained steadfast, has endured and resisted attacks and pressure from different fronts. The real reason for the external value of our currency is not, from any point of view, the policy of the European Central Bank. It is the attitude and resistance of certain governments – such as, for example, the one which has been mentioned here several times over the last 35 hours –, which are ideologically allergic to the economic reforms needed for the European Union to follow the path marked out at the Lisbon Summit.

I would also like to congratulate you on the change of method of adjudication, since the new variable rate system allows more direct control of the monetary aggregate as a result of greater knowledge of the market’s demand curve and, furthermore, allows for certain signals to be sent to the markets on monetary policy. For all of these reasons, Mr President of the European Central Bank, I would like to congratulate you and show you my support.

  Villiers (PPE-DE). – Mr President, in many ways it has been a rather grim year for the euro. I take a rather more pessimistic view than the previous speaker. We have seen the external value of the euro plummet.

The interesting issue is to look at why that fall has happened. There are many reasons which have been explored today, but a big reason is that the markets do not believe in a currency without a country. They do not believe in a currency which is not backed by a political institution or a government. This is a very good illustration of the inherent link between economic and monetary union and political union. The one follows almost inevitably from the other. That is one of the many reasons why the United Kingdom should stay out of the euro.

But what is vital is that the people across Europe have a debate about the future, a debate about political union. Too often in the past they have been told that changes in Europe are technical. Particularly the idea that a move to the euro was merely an economic choice is, quite frankly, a lie. Every time Mr Blair and Mr Brown say that it is a matter of economics whether the UK joins or not, they are deceiving the British public or they are deeply deluded about the future of Europe.

It is only right that in Denmark we are seeing a debate on political union at the moment, as the Danes decide whether to join the euro or not. That is the decision that they are making and that is the decision that is faced by the United Kingdom. I trust that both of those countries will say no to political union and consequently no to economic union as well. It is about time that the European Union stopped intervening and spending taxpayers' money on one side of this type of political debate. It is unacceptable, in my view, for taxpayers' money – for public funds – to be spent promoting the euro in the ‘out’ countries, because they are engaged in a very important political process. To use government funding on one side of the debate would be an interference in this democratic process. I trust that we will vote in accordance with that in the Karas report at noon today.

  Gallagher (UEN). – Mr President, the introduction of a single currency in Europe was never going to be a simple task, but with 11 countries within the Union covering a population of 300 million, I fully support the single currency.

There has been much debate in recent months about the strength or otherwise of the currency and I would like to pose a very simple question to the detractors of EMU. If the single currency is not working, why are so many countries seeking to join the new structure? I welcome the decision to allow Greece full participation within the single currency. In the Scandinavian countries support for the single currency is rising. Of course we are waiting anxiously for the decision of the Danish people. In the longer term, Eastern and Central European countries seeking to join the European Union will want to participate in the single European currency system. 1 January 2002, which is not far away, is the key date for the circulation of euro notes and coins within the territories of all the EMU participating countries. Business and retailers must gear up their preparation for this date to ensure that the changeover goes smoothly.

From an Irish perspective, I believe that our cash changeover plan is moving very well. Fortunately we can draw on our experience of a change of currency in 1972, when we broke with sterling. We want to ensure that the mistakes that were made then are not made again.

  Duisenberg, President of the European Central Bank. – Mr President. I have had so many congratulations and compliments that I would simply say I thank the European Parliament for the way in which they have received our annual report and I can see the debate here expresses great support for continuation of the policies that we have pursued so far.

There are a few points I would like to comment on. The question raised by Mrs Randzio-Plath, Mr Katiforis and Mr Goebbels all boils down to whether the ECB has too high a growth rate, which has the effect of increasing interest rates. Mrs Berès has asked a very precise question, about which I would like to say the following. I do not understand the pessimism which permeates this aspect of the debate. In the past twenty-five years the average growth rate for real GDP in the euro area has been between 2 and 2.5% per year. This year and next year growth in the euro area will be in excess, even considerably in excess, of 3% per year and we expect inflation to be close to 2%. Due to the volatility of oil prices it might even be more than 2% in some months but the average will be 2%. There will be upside risks, but what we do about this depends on how the situation develops.

In reply to Mrs Randzio-Plath's question if the ECB is against growth rates of over 3%, my unequivocal answer is that we are certainly not against growth rates of 3%, which we expect now. We would be against increased inflation, but that is not yet on the cards although, as I say, the risks will be upside. We are now entering the best period that Europe has had in a long time, in decades, I might say. Unemployment will fall over the next two years. Not by very much, admittedly – there is nothing monetary policy can do to accelerate the process – but unemployment is coming down very gradually and will continue to do so.

If, as well all expect and hope, Greece joins EMU on 1 January next year, only Denmark will be a member of the ERM.

The question was asked what will the ECB do if that creates problems for Denmark? The ECB will do everything in its power to keep Denmark in the ERM and there is no date scheduled for the exchange rate mechanism ending so it will be for an indefinite period. So far Denmark has been remarkably successful as a member of the ERM with smaller exchange rate margins than were permitted within the ERM, and I expect it to remain that way, although I would hope that Denmark will decide to join EMU. But I can assure Mrs Riis-Jørgensen that the cooperation between the European Central Bank and the Danish National Bank is exemplary.

I have already alluded in my introduction to the question of transparency and the summary minutes asked for in the motion for a resolution. The introduction to the monthly press conference refers to the debate in the governing council that has just taken place. The statement is carefully prepared by the whole governing council; it is not a spur of the moment statement. A week later the entire statement is produced again in a more final form. The editorial in the monthly bulletin gives all the information that could be found in summary minutes of the meeting.

  President. – Thank you, Mr Duisenberg.

The debate is closed.

The vote will take place at 11.30 a.m.