For the individual Member State, this is an opportunity to attract financial service providers from third countries who want to take advantage of the opportunity to establish themselves and market their products anywhere in the EU. Second, the single passport will also reduce the cost of doing business. It is in fact estimated that the Action Plan would reduce the cost of capital for 18 million businesses in the EU and drive down the cost of financial services for consumers. Conclusion Against this background it is not surprising that studies on the effects of enlargement show that growth rates would be higher under EU membership than under any other scenario. A European Commission study shows, for example, that during the first five years following accession, growth rates in the acceding countries would be between 1.7% and 3.2% above those that would be achieved if these 25 countries were to proceed with current reforms without joining the EU. A comparable finding also emerges for Malta: the annual growth rate would be between 1.7% and 1.9% higher in the short-run than it would be under the non-membership scenario. The difference would be even larger in subsequent years – Malta’s growth rates could then be between 4.4% and 6.1% higher under EU membership. Such findings and related considerations have led governments, political parties, trade unions and academics from twelve European countries, large and small, islands and continental ones, to conclude that membership of the EU is on balance the best available response to the challenges posed by globalization.
For this audience of bankers and financiers, it would be appropriate to illustrate this point by reference to the institutional framework governing macroeconomic policy in the euro area. Although new members cannot join the euro area immediately upon accession, they are expected to participate in EMU eventually and, therefore, to show a commitment to a stable macroeconomic framework even before accession. Whatever the outcome of the current debate about the Stability and Growth Pact, fiscal discipline will continue to be an important policy ingredient of such a framework as it is a necessary condition for the success of any monetary union. In addition, the obligation to fulfil the Maastricht criteria provides members of the euro area with the impetus to safeguard the sustainability of their economies, not least because deficiencies in the real sector of the economy would ultimately weaken the ability of a Member State to fulfil the Maastricht criteria on an ongoing basis. The euro adds an important dimension to these disciplines. First, through its effects on price transparency it will increasingly compel dominant players in the market place to reconsider their behaviour. This also applies to the financial sector, because a growing number of savers and borrowers will be offered a larger selection of euro-denominated financial instruments that will in time be tradable without limitation across the EU. This will have the added advantage of causing interest rates to converge to low levels.