european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr lucas papademos, vice - president of the european central bank, at the press conference held in rome, 3 april 2003. * * * ladies and gentlemen, the governing council of the european central bank today met for the seventh time outside frankfurt. let me therefore thank both governor fazio for his invitation and generous hospitality, and the staff of the banca d ’ italia for an excellently organised meeting. at our meeting today, which took place in the exceptional circumstances associated with the conflict in iraq, we comprehensively reviewed monetary, financial and economic developments. we discussed at some length the potential economic implications of the military operations. in the governing council ’ s view, it is not possible at this juncture to assess what effect they will have on the global economy, and on economic developments and the medium - term outlook for price stability in the euro area. overall, the basic elements of our assessment of 6 march on the outlook for price stability remain in place and accordingly we decided to keep interest rates unchanged. we also noted that the outbreak of the war has not affected the functioning of the financial system. as indicated in our press release of 20 march, the governing council will act to ensure the proper functioning of financial markets, providing sufficient liquidity in the euro area as needed. let me now explain our assessment of economic developments in more detail. as regards the analysis under the first pillar of our monetary policy strategy, the three - month average of the annual growth rate of m3 was 7. 4 % in the period from december 2002 to february 2003, up from 7. 0 % in the period from november 2002 to january 2003. given the continued high volatility in financial markets, mainly related to the geopolitical uncertainty, m3 growth continued to be fostered by portfolio shifts away from more risky assets. however, m3 growth appears also to have been affected by the low level of short - term interest rates prevailing in the euro area, as indicated by the strong growth in its most liquid components. at the same time, credit growth showed signs of stabilisation in early 2003, after the moderation observed throughout last year. turning to the analysis under the second pillar, recent data and surveys continue to confirm that real gdp growth in the euro area remained weak in early 2003. in particular, the persistence of geopolitical tensions continued to negatively affect sentiment and damp

of countries will come to the fore in the upcoming period and currencies of those countries with lower risk, stronger economic and financial fundamentals and high growth potential are expected to perform better. should macroeconomic stability be maintained and structural reforms be put into effect, turkey will also have a place among these countries. this will support the increase in social welfare in the medium and long term and place our country among developed countries. 6. conclusion in conclusion, the high growth rate we witnessed in the 2002 – 2007 period is evidence of the importance of the implementation of policies based on price stability and fiscal discipline. the high dollarization phenomenon that had adverse effects on our economy in the 1990 ’ s has been alleviated in recent tears. our currency has regained the confidence of economic agents and turkish lira - denominated investment and loan instruments have been increasingly preferred over fx - denominated ones by institutions and citizens. all these improvements are the favorable consequences of the policies pursued in the post - 2001 period. disappearance of dollarization is a precious legacy entrusted to future generations. likewise, as you may recall, real interest rates reached 20 – 25 percent from time to time and entrenched in the minds of economic decision - makers as “ normal ” in the 1990 ’ s. this expectation of high real interest rates has recently been replaced by more reasonable levels. we note this normalization in real interest rates as a remarkable improvement. we assess that if fiscal discipline is not compromised and structural reforms go into effect, in the turkish economy, equilibrium real interest rate will continue to remain at low single digits in the upcoming period as well. lastly, i would once again like to underline the fact that long - term productivity gains necessitate radical economic reforms. the enforcement of the said reforms is a challenging and time - consuming task. moreover, the effects of these reforms will emerge slowly and gradually. however, this is the only way to ensure permanent economic welfare. monetary policy does not have a lasting effect on the long - term growth performance of the economy other than the benefits of establishing and sustaining price stability. the central bank will continue to make a concerted effort to achieve price stability as per the duties and responsibilities entrusted by its law. i would like to end my remarks by extending my regards to all participating academicians and policy - makers for their valuable contributions to the “ world business congress of the international management development association ”. also, i would like to thank, once more, the members of karatay