Throughout the single market, there will be the same visibility of all prices, thus permitting immediate price comparisons, cost comparisons and therefore fostering competition in all markets. My conclusion on this point is that the single currency will not prevent Europe from embarking on eliminating economic rigidities, inducing market flexibilities and generating measures to cope efficiently and successfully with global competition. On the contrary, the single currency endeavour will help foster the structural reforms that are needed in Europe to improve growth prospects and job creation and counter unemployment. The second and third criticisms are based upon the argument that the Europeans will not set up an optimum currency area like the US because of the absence of a federal government and a federal budget and therefore that there is no possibility of ensuring an appropriate consolidated fiscal policy and ensuring shock absorption through automatic stabilizing transfers. In my eyes, the Maastricht Treaty gives a pertinent response to these pertinent questions. The thrust of the spirit and of the letter of the Treaty is that everything is done to construct the euro area as an optimum currency area. First by ensuring that it incorporates economies that have already proved being convergent in the fiscal field as well as in the monetary and financial fields. This is why the so-called five Maastricht criteria are important.
New conditions have been created not only for households and firms in the euro area and adjacent countries but also for economic policy. Sweden is by no means unaffected by this change, even though we are outside the euro area at the start. Economic development in the euro area is crucial for Sweden’s economy. As a member of the European Union, moreover, we are involved in many of the contexts where policy is formed. We have also undertaken to conduct our policy in accordance with the rules that have been established for the Union. Against this background it is important that we are engaged in the discussion of economic policy in Europe. My purpose today has been to highlight a number of issues of importance for the European debate. I have tried to describe how the ECB works, the rules that have been built up for fiscal policy and so on. I have also said something about events in the past six months and discussed some of the problems as I see them. One thing is certain: the euro’s introduction does not constitute the final step in the integration of Europe. The single currency will raise new questions that will be answered by degrees through the cooperation between the countries of Europe. It is important that Sweden takes an active part in that debate. BIS Review 76/1999  6  7  BIS Review 76/1999