And yet, it is a long-standing experience of the Bundesbank that inflation has often been declared dead, but has never actually died. Nothing is more dangerous than complacency and slackening vigilance. Where might any future risks to the stability of the euro lie?
Well, in the first place, a number of unavoidable problems arise in connection with the transition to a larger common monetary area. It is doubtful, for instance, whether the demand for, and the velocity of circulation of, money in the new monetary area will be sufficiently stable from the outset.