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.
This has been the case not just because a number of currencies replaced by the euro played an important international role in the past but also because the euro has become the currency of an economic area which roughly equals the United States in terms of economic size and external trade, and which has the world’s second largest capital markets. Let me emphasise at this juncture that the Eurosystem has no exchange rate target vis-à-vis other major currencies. We are also not participating in a formal exchange rate arrangement with third countries outside the EU, for instance with the United States, and we believe that this situation will continue in the future. It is important to mention that according to the Treaty the single exchange rate policy has to respect the primary objective of price stability. As the representative of a large economic area, the Eurosystem can best meet its overriding objective to maintain price stability in the euro area if it is not constrained by an exchange rate target. However, for smaller, very open economies, setting an exchange rate target may be a very reasonable decision. Against this background the ERM II exchange rate mechanism was created for those member states which have not yet joined monetary union but are willing to do so in the near future. Experience with the European Monetary System (EMS), the predecessor of ERM II, has shown that participation in a system of this kind may facilitate the fulfilment of other convergence criteria.