Furthermore, over the first two years of Monetary Union, there has come to be greater understanding that this is indeed a sensible approach. 2  BIS Review 10/2001  Monetary policy in an environment of structural change Central banking entails, by definition, acting under uncertainty. While this statement holds true in general, it is particularly the case for the ECB. The introduction of the euro had the potential to trigger structural changes in financial, goods and labour markets, which are in part already visible today and may evolve further in the near future. With regard to financial markets, the integration of national money markets into one area-wide money market has been almost without friction since the very start of Stage Three, which has allowed for an efficient implementation of monetary policy decisions. In the other segments of the financial markets, considerable progress has been made, although the integration process is far from complete. The removal of barriers to exchange rate risk between the countries of the euro area helped to facilitate the standardisation of debt instruments and widen the range of investment opportunities. Portfolio allocation strategies within the euro area are now mainly oriented towards a sectoral selection and, to a lesser extent, a national selection of assets. That is an impressive indication of the ongoing integration of financial markets in the euro area. This trend, in turn, enhances the liquidity of markets and affects the financing decisions taken by companies.

The staff of the ECB and the national central banks have already been providing twice-yearly projections to the Governing Council since the start of Monetary Union. Starting with the December 2000 issue of the ECB Monthly Bulletin, these projections are now regularly made available to the public alongside other indicators and other forms of analysis underlying the ECB's monetary policy decisions. Let me emphasise that the publication of projections reflects the ECB's commitment to openness and transparency in sharing the information and analyses underlying its monetary policy decisions. Furthermore, it does not in any way change the ECB's monetary policy strategy. The projections are only one element of the second pillar considered by the Governing Council. Economic projections can only provide a partial summary of the state of the economy. They cannot possibly contain all the information needed to take appropriate policy decisions. In particular, the results do not in themselves reveal the nature of a shock hitting the economy. The appropriate monetary policy to maintain price stability should always depend on the specific circumstances and the nature and magnitude of a threat. For example, the appropriate response to a one-off increase in oil prices may differ from that given to a wage-price spiral, even if both have the same impact on inflation projections. Therefore, projections must always be supplemented by economic assessments and a detailed analysis of individual indicators. The ECB's strategy has sometimes been criticised for being rather complex. However, we are convinced that a simple approach would not have been appropriate.