a view to their early and forceful implementation. in addition, the governing council stressed that such structural improvements at the global level would have to be accompanied by sound policies at home. in this respect, given the size of the euro area and its global role, it is of crucial importance that price stability - and hence a climate conducive to growth and employment - should be maintained in the euro area. achieving this will also be of vital importance for the world economy as a whole. with this in mind, the governing council reviewed the monetary, financial and macroeconomic situation in the euro area. first, the council discussed the monetary situation with reference to preliminary data on the basis of the new harmonised reporting system for money and banking statistics. once internal work has been completed, these monetary statistics will be made available to the public. when looking at various definitions of broad money, our preliminary data show broadly similar and stable annual growth rates of between 3 and 5 % in 1997 and the first half of 1998. according to our initial analysis, these data do not appear to signal inflationary pressures arising from money at this juncture. however, given the preliminary nature of the new data, caution should be exercised with regard to their interpretation. second, as regards other financial indicators, although long - term interest rates have risen recently, they are still at low levels by historical standards and the yield curve has levelled off relative to the situation some months ago. a substantial part of developments in bond markets during recent months reflects a “ flight into quality ”. third, the governing council discussed the broad outlook for prices in the context of the overall macroeconomic environment. with respect to price developments, international factors continued to exert downward pressure. hicp rates in the euro area fell to 1. 2 % in august after having remained unchanged at 1. 4 % from april to july. this mainly reflected a decline in energy prices, which were almost 4 % lower in august than a year earlier, and in other commodity prices. for the euro area as a whole, price pressure as indicated by industrial output prices and labour costs also remained modest. in 1999 average inflation in the euro area is expected to remain subdued, according to the projections available. fourth, considerable difficulties are encountered in precisely assessing and quantifying the impact of recent international developments on prices and, equally, on activity. recent data seem to suggest that real gdp growth in the euro area, which reached 0. 6 % in the first quarter of 1998, has

, the governing council today approved the principles governing the way in which counterfeit euro banknotes will be handled. further details are provided in a separate press release which is to be issued to you this evening. the governing council has also agreed on the approach to be used for estimating the number of euro banknotes to be printed before the launch date of 1 january 2002. the quantity of euro banknotes to be printed will be determined by the number required to replace the stocks of national banknotes in circulation ( launch stocks ) in the participating eu member states together with the volume of the logistical stocks needed to ensure that the banknote changeover operates smoothly. it is currently estimated that up to approximately 13 billion euro banknotes will need to be printed before the issue date for the eleven participating member states. this estimate will be updated regularly as we approach 2002. a separate press release on banknotes is to be issued to you this evening. finally, the governing council also addressed the following matters. first, with regard to statistics, it was agreed to publish an addendum to the document entitled the “ money and banking statistics compilation guide - guidance provided to ncbs for the compilation of money and banking statistics for submission to the ecb ”. the addendum covers the treatment of both money market paper and bill - based lending within the harmonised framework for money and banking statistics. the original compilation guide was published by the emi in april 1998. second, the governing council took stock of the current state of affairs with regard to the testing of critical escb systems and procedures in the run - up to the start of stage three. the escb has just commenced a general “ dress rehearsal ”, i. e. a final testing phase for all escb systems and procedures. finally, looking a little further ahead to beyond the start of stage three, the governing council also agreed that a series of tests should be conducted during the course of 1999 in order to ensure that all escb - wide systems and applications are year 2000 compliant.