Temporary factors could still affect price developments for some months to come: health concerns related to meat consumption and the consequences of the outbreak of foot-and-mouth disease could continue to affect unprocessed food prices. Furthermore, pass trough of past rises in oil prices and the depreciation of the euro are likely to affect price developments for some months. Let me now turn to the question of International Financial Architecture. Impressive progress has been achieved in the recent years to reinforce international financial stability and to enhance prevention. We must continue our efforts toward further progress as regards the reform of the financial architecture. I also think that fruitful lessons can be drawn from the assessment of the new characteristics of financial markets and their impact on financial stability. 1. We must pursue and reinforce our efforts towards a renewed international financial architecture. These efforts should tend to improve prevention and management of financial crises. 1.1  Strengthening prevention  Strengthening prevention calls for parallel efforts from all actors, international financial institutions, investors and public authorities. Prevention lays on appropriate surveillance and adequate macroeconomic policies. 1.1.1  As regards surveillance, much progress has already been achieved:  -  In the institutional field, important changes have recently occurred: let me mention the impressive work carried out by the Financial Stability Forum in 1999 (e.g. reports on Highly Leverage Institutions, Capital flows, Incentives to Foster Implementation of Standards). I could also quote the work of the G20 or the International Monetary and Financial Committee.

In the period from February to April 2001, the three-months average of the annual growth rates of M3 adjusted for holdings by residents outside the euro area of money market fund shares was 4.6%, which roughly corresponds to the reference value of 4.5%. Although credit aggregate figures remained dynamic, some slowdown has also been observed in their case. -  in addition, there is now clear evidence that M3 figures are distorted upwards by non-euro area residents’ purchases of negotiable paper included in M3. This distortion has become more sizeable recently and can roughly be estimated to around half a percentage point. All in all, information gathered from the first pillar pointed out that there were less risks to price stability over the medium-term emanating from monetary developments. As regards the second pillar of the ECB monetary policy strategy, upward risks to price stability over the medium-term also have diminished somewhat. Still, HICP growth rate has accelerated on a year-on-year basis in April to 2.9% and possibly the figure for May will not be very good. But these developments mainly seem to be generated by temporary factors that should substantially diminish over next 12 months to permit inflation to go back below the level of 2% which is our ceiling for the definition of price stability. However, evidence as well as global uncertainties regarding the international context also require continuous monitoring of growth trends and wage developments.