Local view for "http://purl.org/linkedpolitics/eu/plenary/2002-07-02-Speech-2-128"
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"en.20020702.6.2-128"2
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"Mr President, Mr Duisenberg, ladies and gentlemen, the Stability and Growth Pact is an essential element in the credibility of the Euro area. Measures taken by governments in the Euro area to reorganise public finances have created a basis for sustainable economic growth and a strengthening of the euro. Although I do not at present see any need to alter the Stability and Growth Pact of 1997, I nevertheless support the notion that any possible uncovered pension obligations in the Member States and current levels of taxation should also be taken into consideration when assessing payments made by euro countries in compliance with that agreement. Funded pension obligations and low taxes do mean there is more room to move in a crisis.
During recent months the euro has strengthened against the dollar. Although parity in itself has no economic importance it is nevertheless a psychologically significant sign of the confidence market and financial players have in the stability of the Euro area and a development that is seen as positive. I agree with the ECB’s judgment that the strengthening of the euro against the dollar is a positive development, as long as the currency strengthens in a controlled way and not too fast. Increased private investment in the Euro area shows that investors have more faith in the future of the Euro zone than they do in the medium-term economic prospects of the United States of America. Enron, Xerox, Worldcom, as well as any subsequent cases, will probably only serve to strengthen this development.
The question arises as to what impact the strengthening of the euro will have on inflationary pressures. In the last few days we have been hearing conflicting messages from Mr Eichel and Mr Solbes, among others. It has, for example, been stated that the euro’s parity with the dollar is reducing pressure on the raising of interest rates. Others, meanwhile, have been concerned about the strengthening of the euro against the dollar, as was revealed, for example, in the interview Commissioner Solbes gave last Saturday. How in this connection are we to appraise, furthermore, the action that the ECB took last Friday when it intervened in the currency markets in collaboration with Japan? I would very much like to hear Mr Duisenberg’s view of this matter, and especially concerning whether the strengthening of the euro against the dollar will make it possible to keep interest rates at their present level. Inflation is 1.7% at the moment, its lowest since December 1999.
Last week’s M3 growth figures were higher than predicted. This raises the question as to how this will affect the ECB’s current monetary policy. This fundamental question relates to the whole role of the first pillar. We support the two-pillar strategy. The long-term link between money and inflation is recognised by most academics. However, first pillar management is complex and is sometimes ill suited to day-to-day decision-making. I would hope that the ECB will explain the content and role of the first pillar in detail in its monetary policy.
At a time when the markets are highly volatile, it is more important than ever for the ECB to act transparently. I would also like to take this opportunity to thank the European Central Bank and its chairman for improvements in its information practices and its positive attitude to dialogue with Parliament regarding monetary policy.
At the same time, in its report, Parliament encourages the ECB Governing Council to exploit the decision-making process made possible by the EU Treaty by voting. This will make it possible to react to changes in developments more rapidly if necessary. The results of voting in the Governing Council should also be made public. If dissenting opinion and any results of voting are published anonymously it will strengthen the confidence, such as it is now, the markets have in the European Central Bank. Making more information available will enable better forecasts to be made of future developments.
It is the opinions of our citizens that are the basis for our work. Two out of three consumers in the Euro area believe that when they switched to the euro prices went up and products became more expensive compared to average prices at the end of the previous year. This feeling they have is not, however, borne out by statistics on inflation. The measures Member States have taken to stabilise their economies have led to a very low average inflation figure over the last three years. The occasional, relatively tiny price rises in the service sector were felt by consumers to be surprisingly dramatic. We must therefore in future ensure that the public is very clearly informed about developments concerning the euro.
According to research, over 60% of consumers still do not think in euros when they consider the prices of products. For this reason I would urge Member States to keep to dual pricing to allow us all more time to get used to our new money. We must not permit any gap in our awareness of prices, and consumers in the future must be able to prevent additional inflation though their own purchasing decisions. Dual pricing will also ensure that the forthcoming holiday period in central Europe will flow smoothly.
Last week a figure who was at the heart of the subject of our discussion today passed away at the age of 88: Luxembourg’s Prime Minister, who was in office for many years and was one of the founding fathers of the euro, Pierre Werner. In the 1970s Mr Werner drafted the Werner report, named after him, which created a basis for setting up the European Central Bank. I too, as the European Parliament’s rapporteur, wish to dedicate the last part of my speech to the memory of Mr Werner. Pierre Werner was a man of great vision. The European Union is founded on common visions – the views of our continent’s citizens and statesmen – of how common European challenges should be resolved. We must bear in mind these visions, these common aims, and, moreover, the jointly agreed principles regarding responsible and sustainable economic policy, when we seek solutions to our continent’s political and economic problems."@en1
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