higher incomes and accelerate the benefits of reforms, thereby making the euro area more resilient to global shocks. fiscal policies should support the economic recovery, while remaining in compliance with the eu ’ s fiscal rules. full and consistent implementation of the stability and growth pact is crucial for confidence in our fiscal framework. at the same time, all countries should strive for a growthfriendly composition of fiscal policies. we are now at your disposal for questions. bis central bankers ’ speeches

48 % in 1997. of family is cyprus joining? what are the key features of the soon - to - be - enlarged euro area economy? iii. i economic performance of the euro area cyprus will enter a large economic area representing a zone of monetary stability with low inflation and low interest rates. despite the large – almost unprecedented – number of substantial and prolonged adverse price shocks that have hit the euro area economy over the past few years, notably strong and persistent increases in oil prices, the ecb ’ s monetary policy has succeeded in keeping inflation under control. annual inflation rates have remained in the vicinity of our quantitative definition of price stability as embodied in our objective of keeping price increases below, but close to, 2 %. at the same time, inflation volatility has, overall, declined considerably. as a result of this favourable track record and the credibility of the ecb ’ s monetary policy, long - term inflation expectations in the euro area, for example those derived from long - term bond yields, have remained solidly anchored in line with price stability. this demonstrates that market participants have confidence in the ecb ’ s ability to credibly deliver price stability over the medium and long term, in line with its treaty mandate. as a result of the ecb ’ s credible commitment to price stability and the effectiveness of its monetary policy, the euro area has benefited from favourable financing conditions, with low inflation risk premia and low and less volatile interest rates, both in nominal and real terms, across the maturity spectrum. the elimination of exchange rate variability between euro area countries has reduced the volatility of the prices of internationally traded goods. overall, the degree of macroeconomic stability enjoyed by the euro area over the eight years since the launch of the single currency has been remarkable, both by historical standards and when compared with that of other major economies, such as the united states. another important feature of the euro area economy is its significant ongoing structural adjustment as a result of the completion of the internal market, including the increasing integration of financial markets, and the implementation of reforms in most member states aimed at strengthening competition, increasing market flexibility and efficiency, and raising labour utilisation. the integration of markets and the creation of the single european currency have had mutually reinforcing positive effects. more specifically, greater price transparency across the euro area and reduced transaction and information costs foster competition and promote trade, with favourable effects on prices, investment and employment. as a result of these effects and the impact of