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Dáil Éireann debate -
Thursday, 30 Nov 2000

Vol. 527 No. 2

Written Answers. - Single European Currency.

Bernard J. Durkan

Question:

93 Mr. Durkan asked the Minister for Finance if he will quantify the potential benefit to business and consumers generally, of the euro; and if he will make a statement on the matter. [28122/00]

The potential benefits of the single currency include:

(i)elimination of transaction costs and exchange rate risk for trade, tourism and investment among participating member states;

(ii)low and fairly uniform interest rates among participating member states;

(iii)consolidation and fuller development of the internal market;

(iv)promotion of price stability, sound public finances and sustained low-inflation growth in participating member states;

(v)increased attractiveness of participating member states to foreign investment; and

(vi)a voice in decisions about the single monetary policy of the Union.

In relation to the Deputy's request to have these benefits quantified I would refer the Deputy to the ESRI study – The Economic Implications for Ireland of EMU (July 1996) which was an indepth study of the issue.

It should be borne in mind that the success of the euro can only be judged in the medium to long-term. It is simply not possible to give a definite judgment after less than two years experience of a project of such complexity and magnitude of importance for the European Union. A full analysis of the impact on Ireland of EMU membership will only be possible with several years' experience of the single currency regime.

Bernard J. Durkan

Question:

94 Mr. Durkan asked the Minister for Finance the extent to which he and the other EU Ministers for Finance are devoting their attention to measures to stabilise and enhance the Euro; and if he will make a statement on the matter. [28123/00]

As Minister for Finance, I have not commented in the past on the euro exchange rate and I do not now propose to do so.

However, the Euro 11 Finance Ministers and the ECB have stated that they share the view that growth is now very robust in the euro area and is increasingly rooted in domestic demand. They consider that, as a consequence, the euro has potential for appreciation, firmly based on growth and internal price stability. In their view, a strong economy goes along with a strong currency.

Following their meeting in Versailles on 8 September 2000, the Euro Group of Ministers issued the following statement:

"The Euro area Ministers, the Commissioner and the President of the ECB have discussed economic prospects of the euro area, in light of the higher oil prices and recent financial market developments. They share the view that growth remains very robust in the euro area. The fiscal consolidation and the reform effort, especially in the tax field, are well under way.

Ministers stress their determination to speed up this process and to promote the necessary structural reforms in view to increase the growth potential of the euro area. The ECB is committed to ensure that current growth will remain non-inflationary. The Eurogroup and ECB reiterate their common concern that the current level of the euro does not reflect the strong economic fundamentals of the euro area. They agree to follow closely the situation. A strong euro is in the interest of the euro area".

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