attach to an interest rate change of 25 base points at the next governing council meeting. it should be clear, however, that this probability is critically dependent on the assumption of a fixed interest rate spread between the expected onemonth rate and the deduced expected minimum bid rate. a one base point change in the assumed spread would lead to a change in the probability of a 25 base point hike by 4 base points. given the current money market distortions, however, considerable fluctuations in the spread between the one - month rate and the minimum bid rate cannot be ruled out. one reason could be tensions on the swap market owing to a decline in market participants ’ willingness or ability to take risks. our assessment of financial markets ’ uncertainty regarding their interest rate forecast could also be distorted by the current financial market turmoil because of variations in the risk premia contained in the three - month money market interest rates : in order to estimate market participants'uncertainty regarding their interest rate forecast, we derive the risk - neutral density from options on the three - month euribor future. the more certain market participants are about their point forecast on the three - month euribor, the smaller the standard deviation of the estimates should be. we therefore usually interpret a change in the expected three - month euribor distribution as indicating a change in financial markets ’ expectation of eurosystem policy rates. however, currently we cannot rule out the possibility that the financial market turbulence has caused volatility in the risk premium which is currently contained in the interest rate for unsecuritised three - month - money ( euribor ). in order to obtain an answer to the question of what factors are driving an expected change, we continuously analyse the development of the euribor - forward three - month eonia swap spreads. that is the difference between an implied three - month interest rate derived from euribor rates and one derived from eonia swaps. in general, this spread provides information on liquidity premiums for different maturities in the money market. financial market expectations of a steady decline in money market uncertainty would imply not only an ongoing drop in liquidity premiums but also lower premiums for time periods further in the future compared to less distant time spans. 5. 2. 2 financial - market - based expectations on important economic indicators in addition to this money - market analysis, we monitor the development of capital marketoriented measures of risk premia. assuming freedom from arbitrage in capital markets,

of responsibility in order to ensure the lasting success of emu. that means : the right order is to be given to the political agenda. too many resources are going into the question of how fiscal and monetary policy can be coordinated to obtain the right policy mix, and to the question of who is to speak on behalf of the euro, and who is to represent the euro area vis - a - vis other countries and international institutions. some politicians regard these questions as important – i have my doubts about their relevance. answers to those questions are certainly irrelevant to the operation of emu. the fact is : there is a mr euro, the telephone number of the euro is known, and there is no common european economic policy ; so a second mr euro is not needed. 4. instead, the politicians of the euro area should endeavour to continue their good approaches to the further deregulation and liberalisation of the markets, for instance in the energy market ( where some rather disappointing signals are emanating from stockholm ) and to enhance the flexibility of the labour markets. tax relief and reform of the social security systems remain on the agenda. as far as the political union is concerned progress has to be made. in this respect, the stage of intergovernmental cooperation must be overcome. the prospects of a lasting success of emu will be improved if – firstly, every country devotes itself in full to its own reform tasks, – secondly, every institution performs to the best of its ability the duty assigned to it by the ec treaty, and – thirdly, the political integration process proceeds apace and the national egoisms become manageable and ultimately are overcome.