European Central Bank: Press conference - introductory statement
Introductory statement by Mr Willem F Duisenberg, President of the European Central Bank and
Mr Christian Noyer, Vice-President of the European Central Bank, at the press conference, held in
Frankfurt am Main, on 14 December 2000.
* * *
Ladies and gentlemen, the Vice-President and I are here to report on the outcome of today's meeting of
the Governing Council of the ECB.
Let me first report that the Governing Council decided to reconfirm the existing
reference value for
monetary growth, namely an annual growth rate of 4 1/2% for the broad aggregate M3. This decision
was taken on the grounds that the available evidence continues to support the assumptions underlying
the initial derivation of the reference value in December 1998 (and its confirmation in December
1999), namely those for trend potential output growth and the trend decline in M3 income velocity in
the euro area. With regard to the assessment of trend potential output growth, there is still no decisive
evidence that measurable and lasting increases in productivity growth in the euro area would warrant a
significant upward revision in the assumption for trend potential growth. This notwithstanding, the
uncertainties surrounding estimates of the medium-term development of potential output growth in the
euro area have become skewed to the upside. Against this background, the Governing Council will
carefully monitor further evidence with regard to an acceleration of productivity growth in the euro
area. The Governing Council also wishes to emphasise that potential output growth could be
strengthened by further structural reforms in the labour and goods markets. Naturally, the ECB's
monetary policy will take such changes appropriately into account. The ECB will issue a press release
today to provide some background information on the review of the reference value carried out by the
Governing Council.
The Governing Council also conducted its
regular examination of monetary and economic
and their implications for the maintenance of price stability in the euro area. It decided
developments
to leave the minimum bid rate on the main refinancing operations of the Eurosystem unchanged at
4.75%. The interest rates on the marginal lending facility and the deposit facility were also kept
unchanged at 5.75% and 3.75% respectively.
Starting with the first pillar, it is fair to say that M3 growth rates have shown signs of moderation over
the past few months. However, taking into account the protracted upward deviation of M3 growth
from the reference value of 4 1/2% and the still robust growth of credit to the private sector, caution
continues to be warranted with regard to the upside risks to price stability stemming from the
monetary side.
As for key indicators related to the second pillar, the assessment is currently complicated by increased
world
uncertainty. In the first place, this applies to tendencies in the economy. With regard to the
evolution of real GDP growth currently foreseeable for the euro area, the underlying dynamism of
growth continues to prevail, although subject to some moderation. Developments in euro area bond
markets, characterised by a decline in bond yields in November and December, broadly confirm this
assessment of growth. In foreign exchange markets, also reflecting the current outlook for global
growth patterns, the euro has appreciated against the currencies of the euro area's most important
trading partners. The Governing Council considers this development to be a step in the right direction.
Turning to consumer price developments, recent developments have continued to reflect, above all,
developments in oil prices, but also previous developments in the euro exchange rate. Over the
medium term, the upward pressures from energy prices are expected to disappear gradually, while
HICP rates of inflation will increasingly depend on domestic forces. On balance, the Governing
Council judges the risks to price stability still to be on the upside.
The Governing Council will continue to counteract any risks to price stability in the medium term by
responding in a timely manner. At the same time, it does stress the importance of all economic actors
responding in an appropriate manner to the current oil price-led increase in consumer price inflation.
In particular, social partners can rely on the commitment of monetary policy to maintain price stability
over the medium term and they should continue along the path of wage moderation observed in recent
years. In the same vein, fiscal authorities should control expenditure growth, as it could otherwise fuel
upward pressures on prices.
Let me now give the floor to the Vice-President to inform you about discussed by the
other issues
Governing Council.
First of all, I should like to provide you with information on several issues relating to the euro
banknotes and coins.
First, pursuant to the Treaty (Article 106 (2)), the ECB has the exclusive right to approve the volume
of coins issued by the euro area Member States. To this end, the Governing Council adopted an ECB
This Decision, which also covers Greece for the
Decision on the volume of coin issuance in 2001.
first time, will soon be published in the Official Journal of the European Communities.
Second, in order to raise citizens' awareness and to prepare them for the cash changeover at the
beginning of 2002, the Governing Council agreed to organise a
series of conferences on euro
in the course of 2001. These conferences will bring together the key parties
changeover issues
involved in the euro cash changeover process, both at the national and at the European level, with a
view to focusing on the cash changeover preparations. This action should also be seen against the
background of the Conclusions of the European Council meeting in Nice on 7 to 9 December 2000.
Third, the Governing Council decided that tests on the euro banknotes will be carried out in all euro
area countries in 2001. These tests will offer companies an opportunity to check and fine-tune their
cash and/or vending machines and sensors with regard to their being able to recognise and accept euro
banknotes. They will be organised by the euro area national central banks; the Bank of England will
also be invited to participate. The ECB will monitor the test scenario in order to ensure a consistent
approach and will act as the contact point for companies registered in a country without a test centre.
Fourth, further to the ECB's press release of 3 August 2000, when the decisions of the Governing
Council regarding the euro area financial modalities for the 2002 cash changeover were announced,
the Governing Council agreed on general principles for the so-called frontloading and
as from 1 December 2001. Today's
sub-frontloading of euro banknotes outside the euro area
decision, which complements the principles agreed with regard to the frontloading and
subfrontloading of euro banknotes inside the euro area, has to be seen as a contribution to ensuring a
smooth cash changeover in 2002. You will find further information relating to this decision in a
separate press release to be issued this afternoon.
With regard to TARGET, the Governing Council decided to establish a long-term calendar of
to be applied from 2002 onwards. The establishment of such a common
TARGET operating days
long-term calendar was deemed necessary in order to reduce uncertainties for financial markets. In
addition to Saturdays and Sundays, TARGET as a whole, including both domestic and cross-border
transactions, will be closed for a total of six days in the calendar year. You will find further
information relating to this decision in a separate press release to be issued this afternoon.
The Governing Council also adopted several which will
legal acts related to the field of accounting,
be published shortly in the Official Journal of the European Communities. These acts relate to the
legal framework for accounting and reporting within the ESCB, the annual accounts of the ECB and
the allocation of monetary income of the euro area national central banks and losses of the ECB for the
financial years 1999 to 2001.
Let me also draw your attention to some of the decisions taken by the Governing Council at its
previous two meetings.
First, the has been approved. It includes a staff increase of 7%. By the end of
ECB budget for 2001
2001, the ECB will therefore have approximately 1,100 staff members.
Second, in connection with the the Governing Council
Bank of Greece's entry into the Eurosystem,
adopted several legal instruments on the transfer of foreign reserves from the Bank of Greece to the
ECB, the crediting to the Bank of Greece of a corresponding claim on the ECB and the contribution to
the capital, reserves and provisions of the ECB by the Bank of Greece. These legal acts will be
published in the Official Journal of the European Communities shortly. Amendments to several other
legal instruments were also adopted.
Third, I should like to mention that, following the very positive reaction to last year's "Helsinki
Seminar", the ECB is organising a second
seminar with high-ranking officials from the central
This seminar will be held tomorrow in Vienna, in co-operation
banks of the EU accession countries.
with the Oesterreichische Nationalbank, and will focus in particular on issues related to the price
dynamics in accession countries, the role of the central banks in managing the accession process and
the co-operation between the Eurosystem and the accession countries' central banks. The "Vienna
Seminar" will be followed by a press conference at 4 p.m. tomorrow.
Finally, I should like to inform you that the Governing Council has decided that its next meeting,
which is scheduled for 4 January 2001, will be held by means of a teleconference. The press
conference originally planned for that day has thus been cancelled. The next press conference will
take place on 1 February 2001.