According to the IMF, this effect is estimated to have contributed 1.5-2.0 percentage points per annum to inflation for EU countries catching up on productivity. The recent statistics available for the United States also confirm that wage and salary differentials within the euro area are by no means atypical in a monetary union : for example, in the US the average weekly earnings in the non-durable goods sector stood at USD 546 at the national level, while standing at USD 437 in Mississippi and USD 644 in New Jersey. I am convinced that we can be reasonably confident in the increasing integration of European countries, and in the fact that economic developments are becoming more and more correlated in the area. It has been highlighted, in the academic field, by several empirical investigations that business cycles are becoming more synchronous across Europe. Secondly it has often been questioned whether EMU can be a success without some form of enhanced political union. Certainly, for EMU to function well, all Member States must be aware of the spill-over effects of all their national policies, especially their budgetary policies. In this regard, we are in favour of strong co-ordination between economic policies, while respecting the independence of the Eurosystem. This co-ordination is contained in the Treaty itself, which obliges Member States to treat national economic policies “as a matter of common interest” and subjects them to a multilateral procedure. Even more importantly, the euro zone is not devoid of mechanisms conducive to an appropriate policy mix.
II.The euro as a catalyst for further progress While many acknowledge that the introduction of the euro has been broadly successful, one may ask at this point what needs to happen to ensure the success of the euro in the medium term. What is very encouraging in this respect is the fact that in a number of areas the euro itself appears to be as a catalyst for these conditions to be met. II.1. The euro and the single market a/ The euro is the crowning achievement of the single market. Need we mention the advantages inherent in the single market? It enables the productive sector to make significant economies of scale and allows savings to be allocated to the most efficient investments. It also enhances market visibility and boosts competition and innovation to the benefit of consumers. But the ultimate objective of the single market could not be achieved while monetary barriers continue to prevent the free flow of goods, services, capital and, in a way, people, by imposing unpredictable and erratic exchange-rate movements and transaction costs. The last step in this process will be made with the cash changeover at the end of this year; it will enable not only enterprises but all our citizens to enjoy all the advantages of using the same monetary instrument throughout the European continent, just like Americans do today throughout the territory of the United States. b/Moreover, the introduction of the euro brings about a significant change in the economic and financial environment.