words about recent exchange rate developments. from a monetary policy point of view, they are clearly a cause for concern as they add to upward pressure on consumer prices in the euro area. furthermore, they do not appear to be appropriate when looking at fundamentals. as you are aware, we already expressed this concern for some time. in the meantime, we have witnessed a considerable improvement in the economic growth prospects for the euro area. at the same time, as a result of measures taken by the governing council of the ecb, the outlook for price stability in the euro area remained intact. at present, inflation in the euro area is among the lowest in the world. the fact that the euro has continued to depreciate in recent months is not in line with these strong economic fundamentals of the euro area. recent global exchange rate developments are also not in line with international balance of payment positions. 2. other activities of the eurosystem let me now turn to other activities of the eurosystem, starting with several decisions which were taken with regard to the introduction of the euro banknotes and coins on 1 january 2002. the ecb, together with the other european institutions and the member states, is paying closest attention to this crucial event, which will mark the final step in the completion of economic and monetary union. as you are aware, the ecb has launched an information campaign on the 2002 cash changeover, on which my colleague, mr. domingo solans, reported to you in may. i should like to recall that the ecb shares the parliament ’ s view that a coordination of the various information campaigns conducted at the european and national levels is essential in order to provide clear and consistent information to markets and the general public. moreover, several measures have recently been taken by the ecb in order to facilitate further the changeover process for market participants and the general public. in july the governing council defined the general principles of the framework for the euro cash changeover, including the financial modalities for credit institutions. moreover, 1 september 2001 was fixed as the starting date for the frontloading of euro cash to credit institutions in the euro area. this implies that credit institutions may also commence the sub - frontloading of euro cash to retailers, the vending machine industry and cash - in - transit companies in september 2001. given that the euro banknotes and coins will become legal tender only as of 1 january 2002, the eurosystem will retain the ownership of all frontloaded euro

willem f duisenberg : economic and monetary developments and other activities of the eurosystem introductory statement delivered by dr willem f duisenberg, president of the european central bank, at a hearing before the committee on economic and monetary affairs of the european parliament, brussels, on 12 september 2000. * * * today we shall continue our regular exchange of views on monetary policy and other activities of the eurosystem. i am glad to see that since our last meeting on 20 june the prospects for economic growth in the euro area have remained very favourable. at the same time, upward pressures on prices had emerged which needed to be addressed by the ecb in a timely manner and led to the decision on 31 august to increase the ecb interest rates by 25 basis points. i shall start my remarks by commenting in detail on this step and on our assessment of the monetary and economic developments in the euro area which underpinned our decision. subsequently i shall address some other issues of topical interest, namely the preparation of the euro cash changeover, the current efforts to improve the availability of statistical data in the eu and the role of the ecb in the oversight of payment systems. i shall then be happy to answer your questions. 1. economic and monetary developments turning to the ecb ’ s decision to increase the ecb interest rates by 25 basis points on 31 august, i should like to start my explanations by pointing out that, prior to the interest rate hike, upside risks to price stability were evident from both pillars of the ecb ’ s monetary policy strategy. starting with the first pillar, some moderation in the evolution of monetary aggregates has been gradually detectable over recent months. this could be related to the increase in short - term interest rates in the euro area over the course of this year, which has had a dampening effect on the demand for the most liquid components of m3, namely those included in m1 ( currency in circulation and overnight deposits, both of which bear little or no remuneration ). however, in spite of the deceleration observed recently, m3 growth has remained above the reference value. this, in part, reflects the relatively strong increase in nominal gdp in the euro area. furthermore, in order to assess the overall liquidity situation in the euro area, we have to acknowledge that, owing to the protracted deviation of m3 growth from the reference value which has occurred since the start of stage three of emu, the actual level of the stock of m3