Jean-Claude Trichet: EMU and the euro - successes and challenges Speech by Mr Jean-Claude Trichet, President of the ECB, delivered at the conference “The Euro Five Years After”, Amsterdam, 12 October 2004. *  *  *  Ladies and gentlemen, it is a great pleasure to share some thoughts on the European Monetary Union with the distinguished attendance gathered in this conference by the European Commission and the EU Presidency. The establishment of the new currency - first in book-entry form and successively in its full physical embodiment - has made western Europeans fully part of a more integrated area and is substantially contributing to reinforce their European identity. More recently, the enlargement of the Union, and in particular the inclusion of the new democracies of Central and Eastern Europe, has represented yet another grand contribution of Europe to the diffusion of free institutions, the safeguard of geopolitical stability and peace, and the promotion of economic progress on a global scale. We have decided to build a larger and peaceful Union of people to which the rest of the world can look for encouragement and example. It is around these themes that I will organise my few remarks today. My purpose will not be that of communicating a sense of complacency over past achievements. I will try to convey in my words the visionary drive towards action that still inspires the process of institutional transition in our Continent.
If one also takes into account the depreciation of the domestic currency against $ as at end-November, the stock market of Thailand has fallen by 71% from its peak this year, Malaysia by 69.7%, Indonesia by 64%, Korea by 61% and BIS Review 116/1997  -2-  the Philippines by 61%. Even Singapore’s stock market suffered a 35.7% drop in $ terms, which is comparable to the 37.7% fall in the Hang Seng Index. Only Taiwan recorded a lower fall of 31%, whereas the Nikkei also lost 28%. I quoted these figures in order to illustrate the magnitude of the turmoil and its contagion effects on the asset markets in the region. Singapore, which is a strong economy and given a triple-A rating by the international rating agencies, adopts a managed floating rate regime, but such regime has not insulated its asset markets from the regional turmoil. In terms of interest rates, Singapore’s one month interbank rate rose by almost 5 times to 16% on 27 October from around 3.6% on 2 July. Singapore’s one month rate is now 6.25%, which is still significantly higher than the level in early July. In the case of Hong Kong, the one month rate rose also by around 5 times from 6% in early July to a high of 30% on 23 October. At present the one month rate in Hong Kong is around 7.5%.