Jean-Claude Trichet: The Euro and the monetary union Speech by Mr Jean-Claude Trichet, Governor of the Banque de France, at the Society of Business Economists Annual Dinner, London, 12 February 2002 *  *  *  Ladies and gentlemen, it is a great pleasure and an honour to be with you today, in the occasion of the Annual Dinner of the Society of Business Economists, in front of such a distinguished audience. I am particularly pleased to express my views on the euro and its prospects following the successful launch st of the notes and coins on 1 January 2002. I am happy to have an opportunity to present my views on the successful set-up of the euro, on the economic and financial integration of Europe and on the challenges that the euro-zone has to cope with. The Euro: built on a successful set-up Set-up of the Eurosystem The single monetary policy is formulated and implemented within a sound institutional framework, the Eurosystem, comprising the European Central Bank and the twelve national central banks of the euro area. Three principles are shaping up the Eurosystem: independence, transparency and decentralisation. The independence of the European Central Bank and national central banks is enshrined in the Treaty. When exercising their powers and carrying out their tasks and duties, neither the central banks of the Eurosystem nor any member of its decision making bodies shall seek or take instructions from Community institutions, from any government of a Member State or from any other body.
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 does play a leading part in ensuring financial stability. This brings me to the second challenge that EMU will have to take up. Financial stability Like every modern and independent central bank, the Eurosystem and its individual components, the national central banks of the euro area, have to fulfil two main functions: firstly, ensuring price stability, a key condition for sustained growth, and secondly, preserving financial stability, a growing challenge in a context of globalisation of the world economy, of amplification of financial and economic cycles, of instant access to information. I insist on the highly complementary nature of these two objectives: price stability is the bedrock on which financial stability is built. The adequacy of European institutional arrangements for financial stability The adequacy of European institutional arrangements for financial stability has been reviewed in depth at the EU level. In two reports, in April 2000 and April 2001, the Economic and Financial Committee (EFC) took stock of the supervisory and regulatory mechanisms in the EU and examined the issue of financial crisis management. It concluded that the current arrangements provided a coherent and flexible basis for safeguarding financial stability and recommended a further strengthening of cross-border and cross-sector co-operation.