There are countries where a large proportion of borrowing is arranged at a variable interest rate; the national tax systems differ, for example as regards tax relief for interest expenditure; and the time required for bank interest rate adjustments varies. All this means that the impact of a change in the monetary union’s interest rate will differ from country to country. In Italy, for instance, lending to households is arranged at variable interest rates to a greater extent than in Germany and the Netherlands. EMU will probably speed up the ongoing integration in these respects, too, so the ECB’s problems may be greatest initially. Many matters to do with the ECB’s working procedures have already been decided. The broad structure is in place. But in many respects, the way in which the ECB and the ESCB will operate and develop in practice is still an open question. Some observers are concerned that national interests will be excessively influential at the expense of a union-wide perspective. They point out, for example, that the NCB Governors make up a larger proportion of the Governing Council than is the case with the regional FED Governors in the United States. Another argument is that the ECB has a limited staff at its disposal. Personally, I do not find this particularly convincing.
The performance of a clearly defined task - maintaining price stability in a way that is good for the union as a whole will be a heavy responsibility for each member of the Governing Council; in this sense they are all in the same boat. There are also many signs that power will gradually shift towards the centre and this in turn will affect recruitment. My guess is that the ECB will be able to attract personnel who are qualified, which in contexts like this is more important than their number. Fiscal policy Fiscal policy is a national concern but the national room to manoeuvre is conditioned by various EU regulations. The Treaty has general provisions to the effect that economic policy is to contribute to the achievement of Community objectives in accordance with BIS Review 50/1998  -4-  the principle of an open market economy with free competition. The Member States are to regard their economic policies as a matter of common concern and are explicitly required to coordinate them but the decisions are to be made on a national level. Then there are more specific agreements on matters like the scale of rates for value-added tax, government subsidies and rules for public procurement. These agreements, which are a limited constraint on the construction of taxes and public spending, have been concluded mainly for purposes other than stabilisation policy - to promote competition and establish a single market for capital, goods, services and labour.