2002. the continued strength in monetary growth reflects an ongoing pronounced preference for liquidity in an environment of high financial, economic and geopolitical uncertainty. in addition, the low level of interest rates in the euro area makes the holding of liquid assets relatively attractive. overall, although liquidity remains ample, it is unlikely at this stage that it will give rise to inflationary pressures, given the current economic environment and the expectation that some of the portfolio shifts will be reversed once the financial market uncertainty diminishes. this assessment is supported by the continuing moderate growth of loans to the private sector, particularly to non - financial corporations. as regards the information under the second pillar, recently published data and survey information indicate that economic growth in the euro area remained subdued around the turn of the year and that the overall sentiment in the economy remained lacklustre. while these indications suggest that growth dynamics will remain weak for the early part of this year, the most likely scenario remains that of a gradual increase of real gdp growth rates, starting in the second half of 2003. the current low levels of interest rates should contribute to this scenario materialising. in addition, while the appreciation of the euro over recent months is likely to contribute to a dampening of export growth to some extent, this should be counterbalanced by the assumed recovery in the world economy. in this respect, it should also be taken into account that the price competitiveness of euro area companies remains favourable in a medium - term perspective. at the same time, uncertainty regarding the economic outlook remains high, in particular due to the ongoing geopolitical tensions. further turbulence in the oil markets could have a negative impact on economic activity throughout the world and, therefore, on euro area employment as well. these concerns could weigh adversely on confidence. in addition, the accumulated macroeconomic imbalances outside the euro area have led to uncertainty surrounding the strength of the recovery in other major economies. by way of conclusion, there are still downside risks to the outlook for euro area economic activity. turning to prices, hicp inflation has remained slightly above 2 % in recent months. on the one hand, there was upward pressure from oil prices and from various increases in indirect taxes and administered prices. on the other hand, the strengthening of the euro, together with base effects, helped to limit year - on - year consumer price increases. looking ahead, given the outlook for moderate economic growth, the gradual pass - through of the appreciation of the euro should contribute

every time a new member state joins the euro area. in view of all these complications i believe we have succeeded in devising a suitable new voting system which should muster the unanimous support of the council and eventually be ratified by the member states. i know that it is not as simple as we would have liked. it is, however, as simple or complex as any other rotation system and fairly similar to the system operating at the federal reserve, where the presidents of federal reserve banks are also allocated to groups and exercise their voting right in the federal open market committee ( fomc ) with different frequencies. i hope that our exchange of views later on will help to clarify any other outstanding issues.