The new exchange rate mechanism may play a similar role. In this context, we should certainly wish to acknowledge the efforts which Sweden is making to achieve sustainable convergence with the euro area. We hope that the success of the euro in its early months will help to convince the Swedish population of the benefits of early participation in monetary union. Clearly, a decision to join ERM II would be important for fulfilling the convergence criterion of exchange rate stability and would help to smooth the transition to participation in the euro area. In recent months the external value of the euro has been influenced by the market view of the economic developments in the euro area relative to the United States. More recently other factors had an impact on the exchange rate of the euro vis-à-vis the dollar, in particular the conflict in Kosovo. From the beginning of the year to mid-May, the euro weakened against the dollar by about 10%. In nominal terms, measured against a trade-weighted basket of the currencies of the 15 most important trading partners of the euro area, the euro has weakened significantly less, i.e. by about 6% since its launch. However, rather than focusing on very short-term developments, one should look at long-term evolution. In that respect, it has to be observed that the current exchange rate of the euro against the dollar is not so very different from the levels observed in the first three quarters of 1998.
The Governing Council of the ECB is the central decision-making body in charge of monetary policy for the euro area. The Treaty on European Union – the Maastricht Treaty – assigns the ESCB the primary objective of maintaining price stability in the euro area. The implementation of monetary policy decisions taken centrally by the Governing Council rests with the Eurosystem, comprising the ECB and the national central banks (NCBs) of the member states which have adopted the euro in stage three of economic and monetary union. The respective operational tasks are to a large extent carried out in a decentralised manner by the NCBs. For the euro to become a success story as the single currency for around 300 million people, the confidence of European citizens in the stability of the new currency and in the Eurosystem is crucial. You would probably agree that the Eurosystem has already achieved a lot in terms of building up credibility and gaining a sound reputation in financial markets for its monetary policy in its early days. This will certainly facilitate the establishment of a stability culture throughout Europe. The foundation of this stability culture is a broad consensus among Europeans that the maintenance of price stability is of the utmost importance and is conducive to the achievement of other objectives such as high employment. Monetary policy and other policy areas By maintaining price stability in the euro area, we will ensure that the single monetary policy contributes as much as possible to economic growth and high employment.