Mr Duisenberg outlines the benefits of European Monetary Union, growth and stability for Europe Speech by the President of the European Central Bank, Dr W F Duisenberg, at the Global Economy conference organised by the Economic Strategy Institute in Washington, D C on 27 April 1999. Introduction Following almost a decade of meticulous preparation and economic convergence, 1 January 1999 saw the start of Stage Three of Economic and Monetary Union (EMU), with the introduction of the euro and a single monetary policy for the euro area. This area constitutes an economic region that roughly equals the United States in terms of both its economic strength and its degree of macroeconomic openness. The euro area has a population of 292 million, which is slightly larger than that of the United States, at 270 million, and a somewhat smaller GDP of EUR 5,800 billion compared with the EUR 7,600 billion of the United States. As will be clear from these figures, the euro area economy is of a formidable magnitude, and indeed is one of the largest economies in the world, with a purchasing power matched only by that of the United States. It is my conviction that EMU has the potential to stimulate further the growth of the euro area economy and to increase the prosperity of its participants. At the same time, a successful EMU is also in the interest of the United States and the world economy in general, creating opportunities for trade, direct and portfolio investment.
Before I address the benefits of EMU and the stability-oriented policies that have to be implemented to ensure that these benefits are achieved, let me briefly mention the main institutional bodies involved in the formulation and implementation of the single monetary policy. Monetary policy is determined by the Governing Council of the European Central Bank (ECB), which consists of the eleven governors of the national central banks (NCBs) of the participating Member States and the six members of the Executive Board of the ECB. The implementation of the single monetary policy is the responsibility of the Eurosystem, which is comprised of the ECB and the eleven NCBs of the participating Member States. The Executive Board of the ECB is a separate decision-making body. Its role is to ensure that the tasks conferred upon the European System of Central Banks (ESCB) are implemented, either through its own activities or through the NCBs. Economic growth - the benefits of EMU I should now like to address the benefits of EMU and why I believe that the introduction of the euro and the single monetary policy can result in higher economic growth in the euro area and thereby contribute positively to the development of the world economy. Of course, the degree to which these benefits are achieved depends not only on the monetary policy of the Eurosystem but even more so on accompanying stability-oriented fiscal policies and appropriate labour market policies.