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Brussels (pte036/17.06.2005/14:19) - The European Central Bank http://www.ecb.int has expressed concern about economic factors in the eurozone and the ineffectiveness of the six-year-old monetary union.
Speaking at the meeting of EU leaders currently underway in Brussels, ECB vice-president Lucas Papademos' voiced concern about the underperformance of eurozone members, which echoes the sentiments of many European Union policy makers.
ECB leaders are admonishing a freeing up of labour and other markets, and have been supporting pro-euro membership, even as the French and the Dutch rejected the EU constitution.
But Mr Papademos had noticed "significant and persistent divergences in measures of competitiveness between member countries". The effects of such differences "raise(s) concerns about their impact on growth". He said "the persistence of these developments suggests that the adjustment mechanisms are functioning slowly".
Six years ago, when the single currency was launched, observers thought of it as a "reform whip" to encourage competition, productivity and market flexibility, Mr Papademos said. However a paper that will be presented on Friday at the ECB conference suggests that this is not the case.
It is clear that a structural reform is necessary in order to boost the economy in the eurozone. However clashes between EU leaders over the union's budget and failed attempts to agree a constitution have overshadowed its structural reform programme.
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