Title: The euro – benefits and challenges
Headings: The euro – benefits and challenges
The euro – benefits and challenges
Speech by Gertrude Tumpel-Gugerell, Member of the Executive Board of the ECBConference “Poland and the EURO” Warsaw, 26 November 2007
1. Introduction
2. Benefits of joining the euro area
3. Challenges related to adoption of the euro
4. Joining the euro area – the formal process
5. Future challenges
European Central Bank
Directorate General Communications

Content: 2. Benefits of joining the euro area
As regards the benefits of euro area membership, these can be seen from two perspectives: from the perspective of the individual country and from the perspective of the euro area as a whole. The convergence process for euro area entry is aimed at ensuring that participation in the euro area is beneficial for both. Starting with the euro area, Monetary Union represents the completion of the Internal Market in the EU, providing full price and cost transparency to the Single Market for goods, services, labour and capital. The euro has brought exchange rate stability within the area, which supports trade and enables economies of scale, thereby providing the conditions for a more efficient allocation of resources. For the ordinary citizen, the most striking advantage is of course that they no longer need to exchange currencies when travelling in the euro area. In addition, the euro has brought monetary stability, with low inflation and a convergence of long-term interest rates to the low levels prevailing in the countries that had the highest monetary policy credibility before the euro was introduced. This was not an obvious outcome. In fact, given differences across countries and the complexity of the task at hand, many commentators doubted whether the euro area could ever achieve the high degree of monetary stability and credibility of some of its legacy currencies.