our assessment of the latest information on monetary, financial market and other economic developments. with regard to monetary developments in the euro area, the data up to october 1999 - which still refer to the period before our decision to raise interest rates - confirmed the picture of a generous liquidity situation in the euro area. the annual growth rate of m3 in october 1999 was 6. 0 %. this compares with 6. 2 % in the previous month. the three - month average of the annual growth rates of m3, covering the period from august to october 1999, was unchanged at 6. 0 %, and thus stood 1½ percentage points above the reference value of 4½ %. the growth of the most liquid components of m3 remained very dynamic. in addition, the annual growth rate of credit to the private sector continued to exceed 10 %. as we have noted on previous occasions, these monetary and credit developments are considered to have been driven mainly by the low level of interest rates, as well as by the pick - up in economic activity in the euro area. the initial reaction of euro area financial markets to the eurosystem ’ s monetary policy move of last month was favourable. in particular, this was signalled by the continued decline in long - term government bond yields and the immediate substantial reduction in market uncertainty regarding the evolution of future long - term interest rates. later in november, long - term bond yields in the euro area began to rise again gradually, in connection with developments in international bond markets and favourable expectations for world growth. indeed, the global economic outlook remains positive, and the view that the world economy is set for higher growth appears to be shared by the major international organisations. at the same time, the expectation that growth differentials between the main economic regions will narrow in the course of time is widespread. while real gdp growth in the united states is generally expected to ease, it is expected to accelerate in the euro area. overall, relatively wide growth differentials between the major world economies will give way to a more balanced scenario, thereby underlining the potential for the euro to appreciate. with regard to developments in economic activity in the euro area, the latest data confirm a strengthening of growth in the course of the second half of 1999. in particular, production growth in the industrial sector saw a further upturn in the third quarter and various survey data suggest that this will continue in the final quarter. all available projections indicate that this upward momentum will lead to an acceleration in real gdp growth, from around

by governments. consequences of the ecb ’ s actions so what can citizens expect will be the consequences of the new programme? let me emphasise three key points. first, our actions will not lead to disguised financing of governments. interventions will take place solely on the secondary market, where bonds already issued are traded. this is fully consistent with the treaty ’ s prohibition on monetary financing. and since we will only purchase bonds with a remaining maturity of between one and three years, there will still be ample room for market discipline on governments at longer maturities. second, our actions will not lead to inflation. the weak overall economic situation, combined with slow money growth, means that the risks of inflation are currently very low over the medium term. our interventions will not change this outlook. in fact, for every euro we inject with our interventions, we will withdraw a euro. so they will not affect monetary conditions. furthermore, we see no signs that our announcement has affected inflation expectations. they are firmly anchored because we have always delivered price stability. and citizens can trust that we will continue to do so : price stability remains our mandate and our sole objective. third, our actions will not lead to greater risks for taxpayers in germany. taxpayers are protected by the fact that our interventions will take place only in countries with sound economic and fiscal policies. their continued commitment to these policies will be ensured by the esm programme. and the ecb will assess compliance with this programme in full independence. moreover, by normalising conditions in financial markets, our actions will help reverse the capital flows into germany that are creating some distortions here. this should ultimately support the savers, pension funds and insurance companies that depend on interest income. and it should reduce target2 imbalances. in other words, ecb actions that support market confidence are of benefit not only to countries in difficulty, but also to the euro area as a whole. our measures ensure the proper transmission of monetary policy, which means neither excessively high interest rates nor excessively low interest rates. the measures enable the ecb to continue to maintain price stability for the benefit of all citizens of the euro area. the announcement on omts has already triggered positive effects. sentiment in financial markets has improved significantly. excessive government bond spreads have gone down, a number of banks in stressed countries have been able to regain access to markets and target2 balances have broadly stabilised. the way forward let me draw to a close. actions by the ecb