a successful communication of their economic benefits to the general public is crucial for raising consumer confidence and, ultimately, growth and employment. we are aware of the fact that structural reforms normally take time to show up in improved economic outcomes, which often makes it politically difficult to implement such reforms. against this background we very much welcome the positive steps undertaken over recent months by several governments and parliaments in the euro area and we strongly encourage them to continue and intensify these efforts. issues related to euro banknotes let me now highlight a few issues related to the experience with euro banknotes during the first couple of years. since the introduction of the euro banknotes and coins on 1 january 2002, circulation has steadily increased. indeed, by end - august 2004 some 9 billion banknotes with a value of eur 460 billion were in circulation, an increase of 10 % in terms of volume and 18 % in terms of value compared with circulation one year earlier. as regards the quality of banknotes, the eurosystem closely monitors the banknotes in circulation and takes the appropriate measures to refresh the cash cycle, when needed. at the same time, the ecb is currently examining ways to enhance the durability of banknotes. moreover, to avoid shortages of certain denominations within the euro area which may occur in the event of strong cross - border flows of banknotes, the eurosystem has set up a cross - euro area stock management scheme. this system greatly enhances efficiency in the use of banknote stocks, since shortages in one country can be compensated for by excess stocks in another country. turning to the issue of combating counterfeiting, the rate of counterfeiting has been relatively stable during the past 12 months, with around 50, 000 to 55, 000 counterfeit banknotes per month withdrawn from circulation. assessing this number against the number of genuine banknotes in circulation ( approximately 9 billion ), the population of the euro area countries ( more than 300 million ) and the number of cash transactions involving banknotes ( estimated to be approximately 120 billion per year ), the initial years of experience with euro banknotes have proven that european citizens can remain confident in the security of their money. that being said, to improve even more the efficiency of the fight against counterfeiting, the eurosystem has recently issued updated communication material on the security features, which should help cash users to spot counterfeits. however, there is no room for any complacency. cooperation in this

bundesbank, vigorously opposed it. what ’ s your position? without knowing the future concrete circumstances underlying a decision on the potential activation of the omt, it is difficult to answer this question. overall i am a little bit critical about the incentives structure offered by the omt. i do see some legal questions coming up. but to get the concrete answers on those questions you need concrete circumstances : the economic conditions ; what you buy ; how much you buy, mitigating factors like the conditionality etc. wsj : how important is it that monetary policy decisions are not influenced by the state of the banking system? what is important is that you have to make sure that the decisions in the banking supervisory arm are not influenced by your monetary policy task and vice versa, and that you can do. but you cannot have a chinese wall in your head. as a central banker, you should be very well familiar with what is happening to banks within in the euro area, after all they constitute one of the biggest monetary policy transmission channels. but rest assured we will implement strict rules and practices to ensure separation between both tasks. currently, we are examining best practices of other central banks around the world, which are also tasked with banking supervision. the decision making procedure for supervisory decision is a very special one : the supervisory board of the ssm will draft the decision and the governing council, the ultimate decision making body, adopts it through a non - objection procedure. wsj : does there need to be a response from the european union to the federal reserve ’ s new rules for international banks? we have an agreement between the u. s. and europe that there is a certain kind of reciprocity in accepting the regulatory regime as equal. the next half year should be a period bis central bankers ’ speeches where we ask our colleagues from the fed, how they want to implement the new foreign bank rules. and then we need to talk in the european arena how we want to react in particular when we are talking about reciprocity. wsj : isn ’ t the asset quality review process for euro - zone banks too late? the u. s. addressed problems with its banks several years ago. no, it is not too late. the aqr and the stress test will be tough. they will be credible, stringent and consistent. it ’ s the last chance to clean up. we are a little bit late, but then again, the situation in the u