If I refer more specifically to what has been observed in the past in France, an economic strategy, based on a moderate increase in unit costs of production, gave us an important edge: the considerable improvement in the cost competitiveness of the French industrial sector from the mid-1980s has contributed extensively to boosting growth. The French economy grew faster than major euro area economies from 1997 to 2001 (+ 15,4 % in France compared to + 13,4 % in the euro area), while repeatedly recording a large current account surplus. This improvement in our overall cost-competitive situation has progressively materialised into growth, job creations and solid external accounts. Competitiveness is also linked to European harmonisation in other fields, for example in the service industries. Most of the barriers to trade in services appear to be due to national regulations and should be abolished or alleviated. While the Eurosystem acts mainly as a stimulus in the process of structural reforms, it also plays a leading role in ensuring financial stability. This brings me to the second challenge that EMU will have to take up. Financial stability Like any independent central bank, the Eurosystem has to fulfil two main functions: firstly, ensuring price stability, which is a key condition for sustained growth, and secondly, preserving financial stability, which has become a critical challenge in a globalized world economy. I insist on the highly complementary nature of these two objectives, as price stability is the foundation on which financial stability is built.
ECB governance On 3 February 2003, the Governing Council of the ECB unanimously approved a Recommendation for a European Council decision, which is aimed at adjusting the voting modalities in the Governing Council in an enlarged euro area, in accordance with article 10.6 of the Statutes introduced by the Treaty of Nice. This adjustment became necessary so as to maintain the efficiency and timeliness of the Governing Council’s decision-making process. The Recommendation has been submitted to the EU Council. We hope that it will eventually be endorsed by the Heads of State and Government after both the European Parliament and the European Commission, which has already delivered its opinion, have been consulted. BIS Review 11/2003  1  As soon as the number of members of the Governing Council will reach 22, the total number of voting rights will be limited to 21. The six executive board members will have a permanent voting right and the NCB Governors will share the remaining 15 voting rights which will rotate among them according to pre-established rules. To ensure that all decisions taken by the Governing Council are representative of the euro area economy as a whole, Governors will be allocated to groups which differ with respect to the frequency with which their members will have voting rights. The allocation of Governors to groups will therefore be done in accordance with a ranking of their respective NCB’s, reflecting mainly the size of economies and of financial sectors.