European Union 3

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environment has been favorable in a number of respects for the transition to EMU and the achievements of its objectives. The strong demand for euro-area exports from industrial countries at more advanced stages of the business cycle and the depreciation of the currencies of euro area countries over the past four years fostered a strengthening of growth in the euro area and helped to offset the effects of the Asian crisis.
There are also challenges for EMU in the global economic environment:
 The crisis in Asia and other emerging market economies could produce adverse spillover effects and make the monetary policy more difficult to carry out.
 The continuation of the crisis could result in weakening of the external demand, which, in turn, could dampen confidence and domestic demand.
 The financial market volatility could increase the uncertainty in assessing the economic indicators.
 The economic crisis in emerging markets could influence the ...

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in coming years as the removal of cross-border currency risk drives pan-European markets.
 The Euro will stand alongside the dollar as the second-most-important currency in the
world, reflecting its coming role in global trade and finance as well as its common usage by 290 million Euroland citizens.
 The new central bank has been given the independence to pursue price stability as a
primary objective. This feature will affect the credibility of the ECB positively and thus the investors would see the Euro as a stable store of value in the next decade.
 Once the single currency takes effect, the national central banks of the euro area will
reduce their ...

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