Co-ordination is stressed in the Treaty itself, which requests that Member States treat national economic policies “as a matter of common concern” and subject them to a multilateral procedure. Naturally, this economic co-ordination can in no way undermine the independence of the ECB and the Eurosystem. Even more importantly, the euro area possesses institutional mechanisms which are conducive to an appropriate policy mix: the Stability and Growth Pact includes, on the part of the Member States, strict fiscal requirements. I will cite three economic justifications for the Treaty provisions that gave rise to the Stability and Growth Pact: –  First, by keeping a rein on the fiscal policies of the EMU Member States, the Pact ensures a satisfactory policy mix within the euro area. This is essential for monetary policy, in order to counterbalance the fact that Europe does not have a federal government and hence no significant “federal” budget. Mutual surveillance and close co-ordination of fiscal policies are the responsibility of the "Eurogroup" and of the Ecofin Council. Keeping the deficit below 3 % of GDP, and achieving budgets that are "close to balance or in surplus" in the medium term, ensure a balanced policy mix throughout the euro area. –  Second, the Pact helps to prevent well-managed economies from having to bear an unjustified risk premium on interest rates, resulting from the poor management of other EMU economies, by setting up a penalty system for excessive deficits.
The euro deepens and completes the single market  a)  The euro makes the completion of the single market possible. It enables the productive sector and companies to achieve significant economies of scale, and all European savings to be allocated to the most efficient investments. It also enhances the transparency of the market and boosts competition and innovation to the benefit of consumers. However, the ultimate objective of the single market could not be fully achieved while monetary barriers continued to prevent the free flow of goods, services and capital by imposing unpredictable and erratic exchange rate movements and transaction costs. The last step in this process will be the euro cash changeover at the end of this year; it will enable not only companies but all our citizens to enjoy all the benefits of using the same monetary instrument throughout Europe, just like Americans do today with the dollar throughout the United States. b)  Moreover, the introduction of the euro brings about a significant change in the economic and financial environment. The introduction of the euro has been a strong catalyst for mergers and acquisitions in the euro area. The European M&A market has been in 2000 one of the most dynamic in the world with operations totalling around one trillion euro. The single monetary policy encourages structural changes in the financial sector, in both the euro area money market and longer-term capital markets. This gives euro area investors greater possibilities and improved financing and investment conditions.