Christian Noyer: The euro, a stabilising factor at home and abroad Speech by Mr Christian Noyer, Governor of the Bank of France, at “Paris Europlace" a financial meeting in Hong Kong, 21 March 2005. *  *  *  Introduction •  The legal basis for the single monetary policy is the Treaty on the European Community, whose Article 105 states that “the primary objective of the European System of Central Banks shall be to maintain price stability”. •  Price stability, combined with the convergence of euro area economies, is the key issue enabling the euro to become a stable international currency. •  Thanks to a strong macroeconomic framework and to the convergence of euro area economies, the introduction of the euro has limited the risks of disequilibrium inside the euro area (Part 1). Furthermore, the international role of the euro as a vector of stability has increased (Part 2). Part 1: The euro has been a key factor for maintaining stability inside the euro area The efficient macroeconomic framework of the euro area (A) has made the economies of the euro area more homogeneous and reduced the risks of macroeconomic disequilibrium (B). As a result, the euro area is characterized by strong economic fundamentals (C). A  The macroeconomic framework of the euro area is an efficient framework  •  For the past six years, the Eurosystem has been responsible for defining and implementing the single monetary policy.
The EMU has limited the risks of exchange rate crises and catalyzed the financial integration of the euro area economy •  The euro has put an end to the potential effects of exchange rate crises and favoured the emergence of a stable environment characterized by historically low interest rates. Thanks to these developments, the euro area countries have not been confronted with difficulties stemming from the uncertainties due to recent geopolitical troubles. •  The introduction of the euro has catalyzed the financial integration of the European economy, which is totally complete as regards the money market. In the first weeks following the introduction of the euro, price differences on national interbank money markets decreased very quickly to stand at less than 5 bp. This level corresponds to the spread bid-ask currently observed on the market. •  A comparable movement has occurred on European bond markets, where returns on government yields have converged. •  The euro area, and more broadly the European Union, now have a consistent financial architecture. The implementation of the Financial Services Action Plan defined at the Lisbon European Council is on the way to completion. Subsequently, the Lamfalussy process should provide a new institutional architecture in the fields of financial supervision and regulation and develop flexible and uniform technical rules. Part 2: The euro plays the role of an international currency and a nominal anchor The available data bear out the increase in the international role of the euro.