REMARKS BY PRESIDENT McALEESE AT A RECEPTION FOR THE ECB GOVERNING COUNCIL ÁRAS AN UACHTARÁIN
REMARKS BY PRESIDENT McALEESE AT A RECEPTION FOR THE ECB GOVERNING COUNCIL ÁRAS AN UACHTARÁIN WEDNESDAY, 9 MAY, 2007
President Trichet, distinguished Members of the Governing Council,
A hundred thousand welcomes as we say in the Irish language, ceád míle fáilte, to Áras an Uachtaráin .
It is a great compliment that the ECB Governing Council has returned to Ireland, to Dublin, for the second time and is it a real pleasure to welcome each of you to this house this evening. A new generation is growing up which will take monetary union completely for granted and which will live with its many benefits perhaps unaware of the formidable undertaking it was and the remarkable success it has been.
The benefits have been considerable – politically, economically and culturally.
Under you, President Trichet, and under your predecessor Wim Duisenberg, respecting the Maastricht Treaty objective of price stability has been the abiding concern of the Governing Council. You and your colleagues have been consistently at the centre of this most important enterprise – one that impacts on the everyday lives of every European citizen.
The outcome has been impressive; since the start of EMU, euro area inflation has on average been one per cent lower than during the preceding decade – something many would have considered unattainable particularly against the backdrop of such factors as the substantial increase in energy prices over recent years. It is hugely to your credit and demonstrates the effectiveness of the ECB and the high degree of credibility it built up over its relatively short lifespan.
We have all benefited greatly from this. Business people have been able to make decisions free from the distorting effects of high inflation. Employees have not felt it necessary to engage in, ultimately counter-productive, excessive wage claims over and above those warranted by productivity growth. People on fixed incomes have not, unlike in earlier times, suffered significant reductions in their purchasing power. With low inflation has come low interest rates for the more than 300 million citizens of an area stretching from Finland to Portugal. Since the start of EMU, the level of short-term interest rates has, on average, been less than half that obtaining during the previous decade.
And with exchange rate volatility now a thing of the past, we have seen the almost complete convergence of long-term interest rates to the lowest level in the euro area. All of which reflects the confidence which investors, consumers and financial market participants currently place in the ECB’s desire to maintain price stability and its ability to do so.
For many of our citizens the most visible benefit of the single currency is the ability to use it when moving between the thirteen members states of the euro area. This confers significant benefits, at one level in terms of convenience and transparency; but at another, deeper, level it has generated an overall sense of solidarity among all the citizens of the euro area. The replacement of national currencies by the euro and its broad acceptance in a variety of countries with very different traditions has been a major achievement.
Looking to the future of the Euro area, one of the most encouraging prospects is the development of the Single Euro Payments Area, which is designed to enable non-cash retail payments to be made throughout the euro area as easily and quickly as national payments can be made now. This is something to which we can all look forward. But it also underlines the importance of continuing to work, as you and others are doing, to complete the single market in financial services, with a view to realising the full potential of Economic and Monetary Union to promote higher and more sustainable economic growth.
Here in Ireland we have witnessed an economic transformation that has seen us end a century and a half of outward migration and become a country of net inward migration, our emigrants returning and non-Irish nationals now accounting for 10 per cent of the workforce.
This change in our economic fortunes did not occur overnight. Embracing the global economy from the 1960s onwards was an important first step; membership of the European Union was a vital component in this regard. Internal reforms such as investment in education and skills – partly with EU support – taxation reform, macro-economic stability, and a commitment to flexible product and labour markets are all part of the story.
Adopting the euro upon its inception in 1999 was a key milestone in the development of the Irish economy. Participation in economic and monetary union has been hugely beneficial, through, for instance, lowering nominal interest rates and raising the attractiveness of the economy as a location for inward investment. Over time, the fixing of exchange rates will further deepen economic links between participating countries, and the trade and investment opportunities stemming from this will be of particular benefit to a small, trading country such as Ireland.
Looking ahead, our challenge will be to consolidate the gains made in recent years and to put in place the mechanisms that will ensure continued improvements in living standards. We are investing heavily in order to address a deficit in infrastructure that currently exists. We are devoting substantial resources to education and training in order to enhance the productive capacity of the economy, to capture the knowledge economy and to help deal with the challenges posed by globalisation. We are implementing micro-economic reforms aimed at improving flexibility and adaptability in the face of the economic shocks that are inevitable in an increasingly globalised economy.
We eagerly anticipate future developments and we look forward with confidence, born of experience, to your continuing stewardship of Europe’s economic and monetary well-being. We are proud to be a country which carries relatively little debt but we owe a debt to each of you.
Once again let me say that it has been a pleasure to have you here this evening.
I wish you all the best for your discussions in Dublin Castle tomorrow.