Joint press conference given by the EU Presidency, the European Central Bank, and the European Commission on the introduction of the euro banknotes and coins, Frankfurt am Main, 3 January 2002

Statements by Rodrigo Rato, President of the ECOFIN Council, Willem F. Duisenberg, President of the European Central Bank and Pedro Solbes, EU Commissioner for Economic and Monetary Affairs

With a transcript of the questions and answers

Mr. Duisenberg:

Good afternoon, Ladies and Gentlemen.

We are currently writing history. This is a very good reason for the new President of the ECOFIN Council, Mr. Rodrigo Rato, the EU Commissioner for Economic and Monetary Affairs, Mr. Pedro Solbes, who both attended today's meeting of the Governing Council, and myself to brief you on the current status of the euro cash changeover. I would like to warmly welcome Mr. Rato and Mr. Solbes and give the floor first to Mr. Rato.

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Thank you Mr. Rato.

The Eurosystem – the European Central Bank and the 12 national central banks of the euro area – and all parties involved were confident that the euro cash changeover would be a success, given the enormous effort and preparation which went into this historic and unprecedented operation. Now, two days after the introduction of the euro banknotes and coins, I can say that the huge task of putting into circulation some 9 billion euro banknotes and over 51 billion euro coins serving more than 300 million citizens in twelve countries has so far progressed very smoothly, even beyond our own expectations.

By the end of 2001, more than 6.5 billion euro banknotes worth some EUR 134 billion – amounting to approximately 50% of national banknote circulation – had been frontloaded, as had more than 37.5 billion euro coins with a total value of around EUR 12.4 billion. Broadly speaking, sub-frontloading was in line with the initial forecasts, and came to between 10 and 20% of the frontloaded amount. At the same time, the withdrawal of legacy currencies was well under way, as the circulation of national banknotes dropped sharply in 2001, falling from EUR 380 million on 1 January 2001 to EUR 270 million on 1 January 2002.

As to the conversion of ATMs, this is very much on track. By 4 p.m. yesterday some 92 % of the total – i.e. around 190,000 machines – had been converted. Later on this afternoon a press release with further updated figures will be released.

The Eurosystem is proud of its contribution to this historic event. We have been working hard since 1996, when the competition for the design of the euro banknotes was launched, and especially for the past three years, to ensure a successful introduction of the euro banknotes and coins. Today, we can see that our efforts and those of all parties involved have not been in vain. In particular, I should like to express my gratitude to the banking community and the retailer sector and to all European citizens for the enthusiasm they have shown for the euro since the euro coin starter kits went on sale in December, but specially since 1 January. It is because Europeans have seized the opportunity to play an active part in the euro changeover that we can already pronounce this unprecedented move a tremendous success.

With the introduction of the euro banknotes and coins, the euro has ceased to be a currency familiar only to the financial markets, to financial institutions and large enterprises.

On 1 January at 00.00 hour, the introduction of the euro banknotes and coins marked not only the completion of Economic and Monetary Union, which is a crucial achievement in itself, but one of the major, if not the major step forward in the history of European integration. I am convinced that 1 January 2002 will appear in the history books in all our countries and beyond as the start of a new era for Europe.

Following the warm welcome that citizens reserved for the euro on the 1st of January 2002 all available information from member states indicates that the retail sector has also passed now successfully to the euro. More than 60 million citizens hold now euro notes and more than 200 million hold euro coins. Progressively the situation should be fully normalised by the end of the second week of January although the coming Saturday will be a real test for the retail sector.

Overall the results so far have been positive and on average better than our expectations. The enthusiasm of the European people for their new currency has been the biggest asset in that operation. The meticulous preparations done over the last three years have paid off. This is a success for everybody; the public authorities, the banking sector, the retail sector, ...for all European citizens, ...for the European Union.

The euro changeover has proved that European people can work together towards a common goal with resolve and determination. It also shows that diversity works in Europe. Each member state took responsibility for its own changeover arrangements and its own information campaigns but the results have to a large degree been homogenous. The co-ordination done by the European Central Bank and the European Commission proved successful and adequate.

However, success to date should not lower our guard. The changeover is not yet over. A lot of work is still needed until every single European citizen, in the cities or in the small village in the country-side, holds euro notes and coins in the quantity and denominations that he or she wants. The logistical operation for withdrawal and destruction of national currency is only starting. Citizens have still to completely adapt to the new unit of account and feel at ease with the converted prices.

The Commission will continue its tight monitoring of the euro changeover and work to help all economic actors involved during this period until everything is working to perfection.

I would now like to add a few words on the economic situation. It is true that 2001 ended with the European economy suffering from the consequences of the world slow-down. But there is more optimism for 2002. According to our estimates the economic situation will start improving already early in 2002 and growth will accelerate during the year. Our economic polices so far have been well adapted to the challenges posed by the world economic slowdown and the existence of the euro has helped to absorb relatively smoothly the external and internal shocks of last year. Now that the euro is also physically there, it is even more important to strengthen our economic policy co-ordination in order to modernise further our economies. We are in the process of increasing the growth potential of the euro-zone by implementing the Lisbon agenda. A particularly close monitoring of the implementation of structural reforms is necessary in order to come out of the current slow-down even stronger than before. The euro is a strong currency because Europe has a strong economy.

Question: I have got two questions. The first is on prices. I find all three of you have been surprisingly positive in saying that all is going well, just two days after the introduction of the euro. What figures are you basing this on? Because experience is just starting to accumulate in our various newspapers, at least in France and Belgium. There has been a degree of slippage – there have been opportunities for retailers to increase their prices. So I find you a bit positive. A year ago you said that there was not a slowdown in the European economy. So wouldn't it be better to be a bit more careful? Now, second, I have got a question for Mr. Duisenberg. I would like to know what is for him the next stage in European integration. Might that for instance be an economic pole or an economic government?

Rato: Given the first question, I think that the data we have right now in most of the countries show that there was not a significant increase in prices in the last two weeks of December. And of course, as we have all said in our national press conferences and public opinions, and also in European public opinion, consumers have to be ready to look at prices right now and in any circumstances. But we do not now see any significant data that show there has been a change in the pricing policy of retailers.

Solbes: I can only confirm what Mr. Rato has said. It is true that there have been some specific increases. We know this quite well. But if we consider these specific increases as a percentage of the average, they are not very relevant. And as I have said many times, we do not expect a real impact on inflation in January. We do not exclude a certain impact, but not a relevant impact.

Duisenberg: If I may add a few words to this. It is true, we do not have systemic structured information yet. The information we have is all anecdotal. But it goes in both directions, I must say. Let me give you two examples. There are anecdotes: the Big Mac I bought yesterday evening cost me, together with a strawberry milkshake, EUR 4.45. That was exactly the same amount, when converted, as I paid last week in Deutsche Mark. On the other hand – sorry for "La Libération" – when I bought "Le Figaro" yesterday, for which I paid FRF 7 last week, I now paid EUR 1, which is a price reduction of almost 7%. So those are the anecdotes we have.

The next step in integration? There will be so many steps. I think one of the major challenges is – and this is an integrated effort – to the Spanish presidency, which will place a lot of emphasis in the next half year on further pursuing structural reforms in the European Union. The major longer-term challenge in the process of integration will undoubtedly be the accession of the new Member States and the absorption of the new Member States in the European Union, all leading up to the intergovernmental conference of 2004, by which time probably – as I've said – a sizeable number of new members will enter the Union. I think these are the two major challenges that we face. But the question was political rather than technical or financial. So maybe Mr. Rato....

Rato: I take the chance to ratify what we have said on previous occasions, that the Spanish presidency of the European Union will certainly put a lot of emphasis on structural reform and that I am very positive that all European governments – not only the euro area governments, but all the European governments – are going to work with us to emphasise the need to change the economic situation of Europe, the economic structure of Europe, and to enlarge the possibilities for growth and employment. And as I said in my first words today, the reaction of the public, of the women and men in the streets of Europe, shows that Europeans like changes, economic changes, such as that which the euro represents.

Question: It is just a follow-up question. You are talking about economic reforms, and that the success in the introduction of the euro shows that people would like more economic reforms. Where do you see the best chances for these reforms and the difficulties, the obstacles to these reforms?

Rato: I think that the fact that the European economy needs to enlarge its growth potential is a consensus among public opinion and governments. To increase the pace of change in network industries, to establish clear objectives for the liberalisation of network industries in Europe, to modernise our labour market so as to produce more jobs of a better quality and to adapt those jobs to new economic circumstances brought by the globalisation of markets and also the existence of new technologies, and to achieve a more efficient and more flexible tax system that will allow investment and savings to increase in Europe. The fulfilment of the creation of a financial structure in Europe, financial markets, following the recommendations for instance of the Lamfalussy Report, arriving at agreements with the Parliament, the Commission and the Council in that respect and fulfilling the targets of the financial action plan for the year 2005, those are examples of things that I certainly think deserve that we as members of governments devote as much time as possible to in the next few weeks.

Question: Mr. Rato, as Chairman of the Eurogroup, will you go on with the policy of your predecessor, Mr. Reynders, to urge – publicly or not – the ECB to cut rates? And, whether yes or no, what do you think of the past presidency of the Eurogroup and Mr. Reynders' policy in this respect?

Rato: Well, I have to say that I do not agree with your definition of my predecessor's policy. I think that not only Mr. Reynders and myself but the rest of the Eurogroup ministers are very responsible and very clear that the responsibility for monetary policy as stated in the Treaties is the responsibility of the European Central Bank. We are clear that that responsibility should aim at price stability. And, of course, all members of the Eurogroup are fully respectful of those responsibilities and the independence of the European Central Bank. And as for the second aspect of your question, the Eurogroup, with the President of the Commission and the European Central Bank, is the place in which we discuss policy mix. And, of course, we do that every month and that, of course, brings in the position of the European Central Bank and its responsibilities and the position of the governments and their own responsibilities, which are mainly budgetary policies and structural reform policies. And in that respect I think that the compliance with the Stability and Growth Pact by all euro area countries is also a shared policy of the Eurogroup, and I am sure that in the next few months, and probably in the next few years, we will continue and give more emphasis to structural reforms in the areas I have mentioned and in other areas.

Question: A question for Mr. Rato. The ECB's Vice-President Christian Noyer is due to step down at the end of May of this year. Have you had discussions about a possible successor yet with your colleagues at the ECB? And how soon does that need to be cleared up? Who is going to take his position?

Rato: I understand that that question is covered by the timetable clearly stated in the Treaties and it is up to the Council to make the decision as to who will take that post. And, of course, as is very normal, countries and governments will speak about that before the moment comes to take the decision.

Question: A question for Mr. Duisenberg. Mr. Wellink, the President of the Dutch national bank said earlier this week that he considers the Netherlands to be the European champion in this euro changeover. He said so because of the smooth way the transition has taken, or is taking place. What do you think of this statement and do you see any losers or winners?

Duisenberg: I see only winners. And I heard the statement, he told me about it, and who am I to disagree with my successor?.

Question: I have a question for Minister Rato. I did not understand one thing. What makes you think that the great acceptance of the new banknotes and the new coins really represents a call for further economic reforms in Europe by the people?

Rato: Well, I think that the existence of the euro represents the fact that we are all citizens of Europe. We are willing to have not a national monetary policy but a European monetary policy. That is not only a European monetary policy but an independent monetary policy. And that of course is certainly one of the most important structural reforms that has happened in the European economy. So, of course, everything can be looked at from different perspectives but I doubt that there will be another place in the world in which citizens from Finland to Portugal and from Ireland to Italy will have received a new currency with such impetus and such optimism and that, I think, shows clearly that Europeans want economic change at least as deep as the one that the euro represents.