and, at the same time, more effective. in this context, moderate wage developments that take into account labour productivity growth, labour market conditions and developments in competitor countries can make an important contribution to fiscal consolidation and employment growth. to sum up, experience has shown that the economic well - being of individual countries participating in monetary union depends on their ability and willingness to effectively implement sound fiscal policies and structural reforms. as we know, there are a number of countries that have managed to fully reap the benefits stemming from membership of the euro area, while other countries have performed in a less satisfactory manner than could legitimately have been expected by their citizens. but this undesirable outcome and policy failure is certainly not the fault of the euro. finally, membership of the euro area also brings with it the privileges and responsibilities of participation in joint decision - making. as a member of the ecb ’ s governing council, governor orphanides will also contribute to decisions on the monetary policy stance. likewise, the staff of the central bank of cyprus will be fully integrated into the work of the eurosystem committees, working groups, task forces, etc. that play an important role in the eurosystem ’ s functioning. naturally, we at the ecb and in the eurosystem are very pleased to have governor orphanides as a new member of the governing council and to welcome the central bank of cyprus into the “ eurosystem team ”. last, but by no means least, cyprus, as a euro area member country, will also be involved in the decision - making as regards all other issues pertaining to monetary union. iv. what is needed for a successful changeover to the euro? will the euro be a success story in cyprus, too? i am confident that it will be. but the extent of the success will depend, as i have argued and as the experience of other countries suggests, on several factors. it will depend on whether the people in this country using the new currency believe in its stability. in this respect, the ability of the ecb to credibly deliver price stability for the euro area as a whole should be reassuring. it will, furthermore, depend on the implementation of appropriate policies. and it will also depend on whether the people of cyprus have confidence in the safety and integrity of their new currency. an important aspect in this context is a smooth cash changeover to the euro – logistically, in terms of public information and as regards the conversion of prices.

properly and the euro changeover does not provide an opportunity to raise prices in an unjustified manner. having seen the positive outcome of price - watching in this country, it is clear to me that cypriots are vigilant consumers. we are aware that food and oil prices have been rising noticeably in recent weeks, and some people may come to attribute these increases to the changeover to the euro. but let me emphasise that this is not a phenomenon affecting only cyprus. all of the citizens of the euro area are, regrettably, confronted with these price increases, which are mainly due to supply constraints in international markets. it might be easy to blame the euro. but it would not be right! if anything, the euro has actually helped to dampen the rise in oil prices, given its recent appreciation on the foreign exchange markets. v. concluding remarks in just over one month ’ s time, cyprus will be part of the euro area. it will join a large economic area that last year accounted for around 15 % of world gdp and is a zone of monetary stability characterised by sound economic fundamentals. the euro area economy is expected to continue to grow at rates close to trend potential. however, this positive outlook is currently surrounded by heightened uncertainty and is subject to downside risks. the ongoing process of risk reappraisal and repricing in financial markets could be more protracted than previously expected and may have a broader impact on financial markets and the economy. this process can be seen as a correction of the underpricing of risks seen in recent years, especially those risks associated with particular segments of the markets for credit and structured finance products. at the same time, the tensions and volatility experienced in some financial markets underline the importance of effective methods and prudent practices in the assessment and management of risk by financial institutions and investors. this is essential in order to ensure that the benefits of financial innovation for market efficiency and economic growth are safeguarded by means of adequate risk management and sufficient market discipline. the ecb will continue to pay great attention to financial market developments in the coming period and will take the necessary measures to ensure the orderly functioning of the money markets. the outlook for price stability is also subject to a number of upside risks. inflation in the euro area, which accelerated to 2. 6 % in october from 2. 1 % in september, is expected to remain at an elevated level significantly above 2 % in the coming months, before moderating again