EMU and the IMF: Camdessus Welcomes Successful Euro Launch; SDR Baskets Are Revised

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The euro, a common currencyfor the 11 member countries of European Economic and Monetary Union (EMU), was launched on January 1, 1999. On January 6, IMF Managing Director Michel Camdessus welcomed the launch in a statement to the IMF's Executive Board. In anticipation ofthe introduction ofthe euro, the IMF, on December 31,1998, announced the incorporation ofthe euro into its SDR valuation and interest rate baskets. On December 22, 1998, the IMF granted observer status to the European Central Bank (ECB). The text of Camdessus's remarks to the Board and other developments relatingto the eurofollow.

I would like to begin this, our first meeting of 1999, by welcoming the successful launch of the euro. This is an historic event-for Europe and for the international monetary system. I would like to congratulate our European colleagues on this collective achievement. Let me share some thoughts with you from the twin perspec-tives of Europe and the international monetary system.

First, the launch itself has been strikingly smooth. This is testament, indeed, to the vision, professionalism, and dedication of all those involved at both the EU [European Union] and national levels. It has also been a model of cooperation and partnership between pub-lic and private sectors.

The foundation for this success has, of course, been created by the impressive strengthening of macroeco-nomic policies in Europe in recent years. In crafting and implementing its monetary policy, the European System of Central Banks (ESCB) will be able to capitalize on the hard-won credibility earned by its member central banks. No less important is the stability-oriented frame-work established by the Maastricht Treaty and the Stability and Growth Pact. These Page 5 auger well for a euro that will command confidence.

EMU is a milestone in European economic integration and the capstone of decades of effort to establish-this time irrevocably-exchange rate stability within continental Europe. But challenges remain to be addressed if EMU is to realize its full promise. In the fiscal area, the task of bringing budgets into balance or small surplus is not yet complete. However, it is in structural reform that the greatest strides now need to be made. Improving the working of labor and product markets, reforming public spending programs, and lightening the burden of taxation-these are the key to realizing Europe's full...