was not interpreted as implying risks to inflation. in fact, it was related to portfolio shifts from longterm to liquid short - term assets included in m3, which were initially linked to a relatively flat yield curve and a continued decline in stock prices and subsequently reinforced by the high financial market uncertainty caused by the terrorist attacks of 11 september. the continuous decline in the annual credit growth to the private sector also supported this assessment. in the light of this information from the two pillars of the monetary policy strategy, the governing council reduced the key ecb interest rates twice by 50 basis points, first on 17 september, in the immediate aftermath of the events of 11 september, and then again on 8 november 2001. after these decisions, the minimum bid rate on the main refinancing operations stood at 3. 25 % and the rates on the deposit facility and the marginal lending facility stood at 2. 25 % and 4. 25 % respectively, 150 basis points lower than a year earlier. let me also report that at its meeting of 8 november 2001, the governing council decided that it would henceforth – as a rule – assess the stance of the ecb's monetary policy only at its first meeting of the month. accordingly, since november 2001 interest rate decisions have only been taken at such meetings. in addition, i should mention that in the context of its regular review of the reference value for m3, the governing council confirmed in december 2001 the value of 4½ % for the annual growth of the broad monetary aggregate m3. i would now like to turn briefly to the analysis of the current economic situation. over recent weeks we have seen a slight weakening of monetary dynamics, which might be a first indication of a gradual unwinding of the factors that led to the increase of m3 growth in the second half of last year, and a continuation of the decline in credit growth. however, owing to the strong m3 growth in 2001, there is still a lot of liquidity in the economy. we therefore have to monitor monetary dynamics closely in the coming months. the persistence of excess liquidity in the economy could become a concern once the economic recovery in the euro area gathers pace. turning to economic developments, the latest information has reinforced our expectation that real gdp growth in the euro area will recover in 2002 and that, later in the year, it should again be back in line with potential growth. the recovery should be supported by both domestic and external factors, in an environment in which financial conditions are favourable and where

the fund ’ s activities. but, of course, providing money is not enough. an interdependent, global economy requires not only efforts to achieve political cooperation but also vigilant watchdogs. in the first instance, it is the market players themselves who are responsible for exercising vigilance. it is not the fund ’ s task to take over or replace the watchdog function of the markets. but in improving the functioning of the financial markets, the imf also pinpoints the responsibility of the private investors themselves. for this reason the imf must concentrate on its original function of acting as a catalyst. this central role of the imf needs to be strengthened rather than reduced. in performing this role, the imf will contribute to enhancing the stability and openness of the global economy. that is a challenge for at least another 50 years!