The crucial and unique advantage of monetary union is the exchange rate certainty it will bring throughout the euro area - not just the reasonable de facto stability that can result from each EU member state individually pursuing disciplined macro-economic policies in parallel, and which has in practice been achieved within much of Europe for quite long periods within the framework of the Exchange Rate Mechanism - but actual, and in principle permanent, exchange rate certainty. There is no doubt that this is a very real advantage. One can argue that exchange rate certainty is not an essential complement to the European single market - any more than exchange rate fixity is essential to achieving the benefits of free trade more generally. But there is no doubt that intra-European exchange rate certainty will - through the intensified competition resulting from greater transparency of prices and lower transaction costs, through broader and deeper capital markets, and through the associated improvement in economic resource allocation - substantially enhance the macro-economic benefits to be derived from the single market. Whether or not it is essential, therefore, exchange rate certainty is very desirable from this perspective. The potential drawback of monetary union can also be simply stated, though it is more difficult to assess.
The irony, of course, is that this country itself will not be a part of that first wave. That is a disappointment to some, but a relief to others - a point I’ll come back to - but, whatever view one takes about that, no-one, I think, can fail to recognise the huge achievement of all those who have laboured, with such determination, for so long, and against formidable difficulties, to bring the venture to this point, and I take my hat off to them. In the circumstances, Mr Chairman, I could hardly choose to speak about anything else this morning. The advent of the euro, on this broad basis, will, of course, have profound effects on financial activity, and on both providers and consumers of financial services, all around the world - including in our Mediterranean partner countries. And I should like to take this momentous development, in the broader context of the evolution of the European Union, as my theme. I recognise at the outset that the EU is, fundamentally, about politics, inspired by the need to ensure that Europe is never again devastated by war. I am only too happy to leave the debate about what that implies for the political organisation of Europe - including the relationship between European institutions and the individual member states - to the politicians. My interest is in the economic dimension of Europe - though I realise of course that economics and politics can’t in practice be separated quite as neatly as this distinction suggests.