for a central bank, communication goes beyond hiring a press officer. communication touches on one of a central banks core tasks : implementing monetary policy. we obviously communicate about our other tasks too, such as the payments system and supervision, but in no other area is communication such an integral part of our objective. short - term interest rates ( money market rates ) are controlled via monetary policy, but the economy is influenced largely through capital market rates. capital market rates not only depend on prevailing money market rates, but also on expected future money market rates. so what is important for monetary policy is that a central bank can influence expected key interest rates. this calls for an open, transparent communication with the financial markets. transparency enhances the effectivity of monetary policy since it provides more insight as to the way that a central bank interprets economic developments, and why it reaches certain decisions. transparency hence makes for less “ noise on the line ” between the central bank and financial markets. moreover, an independent central bank in a democratic system of government also has an obligation to observe transparency. i ’ m inclined to say that the more independent you are, the more transparent you should be. monetary decisions have an effect on economic development. in addition, inflation reduces the value of assets and the purchasing power of income. monetary policy therefore influences people ’ s prosperity. unlike decisions on, say, the budget, monetary decisions are taken independently of democratically elected politicians. this independence enhances the credibility of a central bank. but precisely because of its independence, a central bank must account for its decisions. however, transparency is not an aim in itself, but belongs to the set of instruments needed to realise the central bank ’ s objective. the importance of transparency is also acknowledged by the european central bank. duisenberg and as of the day after tomorrow, trichet - holds a press conference once a month during which he responds to journalists ’ questions. no other large central bank dares to do the same. the ecb president also speaks to the european parliament four times a year. in addition, the ecb has a clear objective, namely price stability. this long - term objective of the ecb is clearer than that of the fed, which must seek a balance between price stability and economic growth. citizens and financial markets can be confident that the ecb will keep inflation low. and they do have that confidence, judging by the low inflation expectations that emerge in surveys and are reflected in the price of some financial instruments. nonetheless

. the dutch and european economy a speech for the dutch media would of course not be complete without some news, but the news i had has been somewhat overtaken by the publication of the latest commission forecasts for the european and dutch economy. our open economy has suffered considerably from the recent worldwide economic downturn. we are also contending with the after - effects of the boom in the late 1990s which eroded our competitiveness. this was a contributory factor in the abrupt reversal in dutch growth from well above the emu average to the lowest in the euro area. but there is light at the end of the tunnel. the american economy is clearly picking up. the crucial question now is whether the euro area, and the netherlands in particular, can benefit from this revival. owing to the poor growth figures in the first two quarters, the netherlands will this year see a significant economic contraction. growth is expected to be more negative than our last projection of – 0. 4 % in the june quarterly bulletin, and will hence be closer to – 1 % than – 0. 5 % over the whole year. according to the latest dnb projections, next year ’ s growth will barely exceed 0. 5 %. despite these setbacks, the nadir of the recession is now behind us. producer confidence has now reached its highest level this year, having shown an increase for four months in a row, while industrial order books and capacity utilization have slightly expanded. although 2004 will still be a year of adjustment, solid foundations will be laid for a sustainable economy recovery. wage moderation and cost - reductions will restore corporate sector competitiveness, renewing growth in business investment for the first time in four years. thanks to this and other factors, growth in 2005 will return to its potential, a potential that will in due course benefit from the range of structural measures now in the pipeline. despite the hesitant start, the economy will hence eventually gain full speed. whereas the economic signals are green, all warning lights in the budgetary area in europe are flashing bright red. three countries have already crashed the red light, with a deficit exceeding the 3 % ceiling under the maastricht treaty. france will do this next year for the third year in succession, and should hence be penalised. the penalty for france could reach 0. 3 % of gdp, representing more than eur 4 billion. however, this fine need only be paid if france fails to narrow its deficit to below the 3 % ceiling within two years