be considered as a clear signal in favour of a more integrated europe. i should like to take the opportunity here to express my gratitude to the european citizens and all parties involved in the changeover for their efforts and their fruitful collaboration with the eurosystem over the years. just to flag some of the efforts made : by the end of 2001, more than 6. 5 billion euro banknotes worth some eur 133 billion and amounting to almost 50 % of national banknote circulation had been frontloaded. with regard to the euro coins, more than 37. 5 billion coins with a total value of around eur 12. 4 billion had been frontloaded. overall, citizens acquired more than 150 million coin starter kits. at the beginning of this week, around 8. 1 billion euro banknotes were in circulation, which is more than 90 % of the number of euro banknotes that had initially been estimated for the end of february 2002. in terms of value, this corresponds to approximately eur 209 billion, which is equivalent to 77 % of national banknotes circulation at the end of 2001. in total, the legacy currency banknotes in circulation declined in 2001 by eur 110 billion to eur 270 billion at the end of the year. since the beginning of 2002, this figure has come down by 51 % to eur 133 billion last monday. the euro progress ratio, which calculates the value of euro banknotes in circulation divided by the total value of euro and national banknotes in circulation, was 61 % on 21 january 2002, up from 33 % on 1 january 2002. given that, in terms of transactions, around 70 % of all banknotes are put into circulation via automated teller machines ( atms ), the quick adaptation of these machines was one of the key factors for a smooth changeover. in total, more than 200, 000 atms had to be converted. in virtually all euro area countries, 100 % of the atms were converted within less than one week. as a result, on average, 75 % of all cash transactions were already effected in euro after only one week. naturally, this figure varied from country to country and from sector to sector. on the whole, the euro banknotes and coins were introduced considerably faster than originally foreseen, not least because of the favourable attitude of and quick acceptance by european citizens. today, even though the technical adaptation of the vending machines has not yet been completed, the cash changeover can be considered

to have been completed from the consumers'point of view, since practically all face - to - face cash transactions are being conducted in euro. more than 80 % of the 10 million vending machines have been adapted, which indicates that this process is taking place at a slightly slower pace than the changeover in general. this may cause some local problems whenever national coins are no longer in active circulation. with regard to counterfeiting, all euro counterfeits reported so far have been of very poor quality. thus far, no counterfeits have been found in central bank sorting operations. finally, i should like to inform you that the changeover has also been smooth and is progressing well outside the euro area. the euro banknotes were received positively, especially in the accession countries, and euro banknotes are now available in banks and " bureaux de change " outside the euro area. with regard to the frontloading of central banks outside the euro area, i should mention that 26 central banks, mainly in central and eastern europe, the mediterranean area and in africa, requested to be frontloaded with euro cash. the total value of the euro banknotes provided to these central banks and to wholesale banks outside the euro area amounted to some eur 4 billion. 2. economic and monetary developments let me now turn to economic and monetary developments and our assessment of the outlook for price stability in the euro area in the medium term. overall, there has been little change in our assessment since my last testimony to this committee on 18 december 2001. starting with the analysis under the first pillar of the ecb's monetary policy strategy, we have seen continued strong growth in m3 in the period up to november. the strong short - term dynamics of m3 over the autumn of 2001 seem mainly to be related to a particularly marked preference for liquid holdings by euro area investors in the context of the worldwide economic uncertainty following the terrorist attacks of 11 september. to the extent that these developments are of a temporary nature, monetary developments can be considered not to indicate future inflationary pressures at present. however, if not reversed, the recent building up of liquidity could call for a re - assessment of monetary developments in the coming months, especially at a time when the euro area economy recovers. regarding the analysis under the second pillar of our strategy, recent information has confirmed our earlier assessment that economic activity in the euro area was weak in the second half of 2001 and will probably remain so in early 2002. at the same time, there