It is not the same to have reached an inflation goal of less than 2% for one year as for ten years. One of the benefits that the “peripheral countries” could reap from participating in the first wave of monetary union is to achieve the level of interest rate of the most credible currencies without having yet built up a very long track record. I would like to underline that in Europe, we are not converging towards a kind of average of the market interest rates of the potential euro area. One has to understand that the philosophy of EMU is to organize the convergence of the European countries towards the best possible level of monetary credibility and therefore towards the benchmarks in terms of interest rates. As Mr. Trichet recently stated, “convergence is a benchmarking concept”, not an averaging process. Convergence does not mean that the “core” currencies’ interest rates should go up towards irrelevant “average levels”, but that the interest rates of more “peripheral” countries should progressively converge towards the benchmark level. This benchmark level is currently given by the intervention rates of the Bundesbank and of the Banque de France, both at 3.3%. But of course the benchmark level one year from now could be different from 3.3%. 2. OPERATIONAL ISSUES How will the ESCB operate? As you know, central banks implement their policies through the creation and destruction of central bank reserves, of which they are monopoly BIS Review 112/1997  -5-  suppliers.
In my description of operational issues within the context of the single monetary policy, I have made numerous and concrete allusions to this reliance of the ECB on the national central banks, in the areas of monetary policy, payment systems and foreign exchange operations. This organisation scheme of the ESCB is in line with the principle of subsidiarity laid down in the Maastricht Treaty. According to this principle, the ESCB shall have recourse to the national central banks to carry out its operations, to the extent deemed possible and appropriate. Consistently with this principle of decentralisation in the execution of the ESCB’s operations, the counterparties (credit institutions) will keep their accounts with the NCBs. Operational decentralisation within the ESCB will be in the very interest of the System. In this regard, let me quote the President of the EMI, Mr. Duisenberg: “Reliance on the infrastructure and operational experience built up by the national central banks will prove a valuable asset. Given that the ESCB needs to be cognisant of differences between financial market participants and structures in the EU, operating through the national central banks will ensure that it has the best possible knowledge of market conditions throughout the euro area”.8 The credibility of the ECB as the decision-making centre will by no means be undermined by this decentralised scheme. It will not depend on the technicalities in the execution of operations.