This will prevent a splitting of the common European internal market. All Member States are making every effort to fulfill the convergence criteria. In 1996 ten Member States already managed to limit price increases to less than two Percent, thus achieving price stability by international standards. In that same year eleven Member States alsofulfilled the criterion of low long-term interest rates, and twelve Member States had stable exchange rates.

The European Central Bank (ECB) domiciled in Frankfurt am Main will guarantee the stability of the euro along the lines of the Deutsche Bundesbank. Through strict sanctions, the Stability Pact agreed by the EU in 1997 will prevent lax budgetary practices on the part of participants in the euro and thus support the ECB in the exercise of its duty to maintain monetary stability. The advantages of the single European currency for Europe’s export-oriented economies, especially Germany’s, are obvious: Exchange rate risks will be eliminated in the European internal market. This will afford firms a more reliable basis for cost accounting and ensure greater transparency and competition. All of the above will create the preconditions for low interest rates, stable prices and secure jobs in a future marked by ever stiffer global competition.

In order to fulfill its functions, the European Union has a number of institutions, some of whose decisions become directly applicable law in the Member States. The most important institutions are:

>the European Parliament (EP), which since 1979 has been elected directly by the people; upon the entry into force of the Treaty of Amsterdam, the EP will acquire many new co-decision powers and will thus become an equal partner of the Council of Ministers;