and though its overall performance was satisfactory on the whole, a few problems did emerge. on the basis of this experience and further analytical work, after five years, eurocoin underwent a substantial overhaul in the bank of italy ’ s research department. after a period of continuous scrutiny and testing, we are now ready to publish a new version. this new indicator, € - coin, is what i am presenting today. we believe that it is a useful tool for the research community and for policy makers, as well as for market participants and watchers ( see figure 1 ). in my talk, i will first briefly summarize the basic ideas behind it. i will then describe the value added of this indicator, show how € - coin can be used for real - time monitoring of the euro - area economy, and compare its performance with that of other commonly used indices, focussing on the advantages of using a large dataset. finally, i will briefly discuss what we can learn about recent economic developments by looking at the behaviour of € - coin over the last few months. as a last remark i would like to stress the reason why i believe it is important for us to share our indicator with market participants and watchers, and the research community at large. obviously a central bank is a public institution and making public the results of research that uses considerable resources adds to the available information and provides a “ public good ”. furthermore, as luigi einaudi, former governor of the bank of italy and president of the italian republic, once said, we need “ to know in order to be able to deliberate ”. we believe that sharing this knowledge helps in forming a common understanding of how our market economy is performing, and in making informed decisions, at both the policy and the market level. figure 1 : the new € - coin indicator 2. € - coin : its value added in monitoring the economy in figure 1 we can see € - coin and the quarterly gdp growth figures as we now know them ( notice that they are not available at the time € - coin is produced ). with respect to the previous version the main improvements of € - coin are : i ) a more timely signal ( at the end of each month we now have an estimate of the underlying gdp growth for that month ) ; ii ) lower volatility ( a smoother indicator and therefore easier to interpret ) ; iii ) a continuous monitoring technique for the data used in the construction of the indicator. these improvements are grounded

estimate is finalized ( at the end of the month ; see figure 5 ). figure 5 : the august “ surprise ” the result shows that with respect to the trends implicit in financial and survey data up to july, the actual turnout in august implied only a minor downward revision. it is still too early to draw definite conclusions but the fall is very modest indeed. while it cannot be excluded that the impact of the august financial turmoil will have only limited repercussions on the underlying macroeconomic conditions of the euro area, it should be noted, on the one hand, that its effects may take time to be fully passed through the economy and, on the other hand, that the turmoil and liquidity strains in the money markets are not over yet. so, a better picture will only be gained with the september and later releases of € - coin. as for september, a very preliminary estimate that does not yet incorporate the information contained in survey data ( available only in the second half of the month ) points to a further moderation of the underlying rate of growth of gdp ( see figure 6 ). note however that the indicator still points to an economic expansion close to potential and above the levels reached at the beginning of 2005. figure 6 : the september “ ( very ) preliminary ” update 4. the way ahead to conclude, the € - coin indicator will be published at the end of each month on the cepr ( eurocoin. cepr. org ) and bank of italy ( eurocoin. bancaditalia. it ) websites. the web pages will contain a graph and a table with the most recent releases of the indicator and a short comment on the interpretation of the signal ( note that past releases are treated as “ final estimates ” and will not be updated ). when there are interesting events, the indicator will be further analysed by breaking it into its main determinants ( surveys, financial variables and so forth ) thus adding some insight in terms of the driving forces of underlying growth. the website will also host a page of invited comments, critiques and suggestions. links will be provided to related literature and background papers.