inflation occurred first in germany but in the course of this year also in other member countries. the governing council of the ecb keeps a close watch on the development of perceived inflation not only because this is crucial to acceptance of the new currency but also because it may additionally have macroeconomic implications, such as matching rising wage demands. all in all, the euro cash changeover is an outstanding example of the eurosystem ’ s ability to cope with major challenges. iv at its last meeting, the ecb governing council discussed in depth the arguments for and against a cut in key interest rates. the rates were left unchanged, but we indicated that we would closely monitor the downside risks to economic growth in the euro area. after a rather mild recession in 2001, economic growth picked up remarkably only in the us. in all other major economies, slight growth was mainly driven by external factors. capacity adjustments - in particular in hi - tech businesses in major industrialised countries - are still taking place. therefore, investment prospects look clouded. the ongoing deflation in japan is due to persistent structural problems in the banking sector. recent announcements to reform the banking system have shed some light on possible solutions. as usual, however, it is harder to implement reforms than announce them. japan, however, is benefiting a little from fairly strong growth in east asian countries. recent data may point at least to an end of recession during the ongoing fiscal year. among the emerging markets, east asia and eastern europe have performed better than again - crisisridden latin america. the crises in argentina and subsequently in uruguay and brazil have proved not to be as contagious as earlier emerging market crises. financial markets are more aware of fundamental aspects nowadays. contagion is more limited. however, economic integration with the other side of the atlantic seems to be closer than ever. the devastating effects of september 11 were by no means confined to the united states. we realised that there have been major repercussions in the european economy, even though trade and financial flows reacted with a time lag and not as strongly. this psychological transmission channel is much faster than trade flows or even financial investments. the worsening of the business climate in the us is having an impact on german investment. in spite of high expectations early this year, the euro - area economy did not accelerate after the first quarter. among the reasons for this are oil prices, the considerable turbulences on financial markets and the looming threat of a military conflict. both factors

initial cash changeover in 2002 and their value has almost tripled since the end of the changeover period. with this success story in mind, we are confidently looking forward to the anniversaries to come, which will be marked by the full consolidation of the euro and its further adoption by new member states. 2. the euro exhibition today we inaugurate the euro exhibition here in rome. the exhibition was previously on display to the public in bratislava to mark the cash changeover in slovakia. it was also shown in barcelona until last week. other locations on its journey throughout europe will follow. the primary objective of the euro exhibition is to give the public at large the opportunity to gain a thorough overview of the euro banknotes and coins and to raise its awareness of their security features. it features, inter alia, modules on the history of money, the design elements of euro banknotes and coins and the functioning of banknote security features. it also includes a range of interactive elements to raise the visitors ’ attention via touch screen applications such as games, films or security feature showcases displaying counterfeit banknotes. you are cordially invited to make use of all the elements which will contribute to make your visit a learning, interesting and amusing experience at the same time. you will certainly notice that the euro exhibition features a common design : the “ ages and styles of europe ”. as you know, there are windows and doorways depicted on the front of each euro banknote and bridges on the back. these architectural elements symbolise communication and connection between the people of europe and between europe and the rest of the world. furthermore, bridges are regarded as a means to connect the past with the future, symbolising thus the way to a common european future. a children ’ s corner has been established to meet children ’ s special expectations. it refers to our children ’ s booklet, specially drafted for primary students. to ensure that the children understand and enjoy the story in their mother tongue, the italian translation of the story was tested by the students of the italian section of the european school in frankfurt, germany. it is a pleasure for us to present this booklet to you today. the booklet tells an exciting short story, set against the realistic background of a counterfeit case and explains, in an appropriate way for children, how to verify the authenticity of a euro banknote. as an additional educational benefit, its multilingual format can arouse the children ’ s interest in other languages. the