In 2004, the average GDP per capita level, as expressed in purchasing power standards, was roughly half of that of the euro area. Catching-up in income levels is partially accompanied by a certain element of rise in price levels. Thus, the process of real convergence can be expected to continue to play a role in the inflationary developments in these countries.
In line with its historical practice and institutional responsibilities, the key objectives pursued by the Eurosystem’s liquidity management during this first phase were two: 1.  to steer the overnight money market rate as close as possible to its central policy rate (the minimum bid rate in the main refinancing operations), so as to implement the monetary policy stance chosen by the Governing Council; and  2.  to ensure the smooth functioning of the money market, also at term maturities, by facilitating access to liquidity to solvent credit institutions.