The ultimate testament to the euro's success, however, was the response of the European citizens, who accepted their new currency rapidly and with enthusiasm, as shown by the swift withdrawal of legacy currencies in the first weeks following the cash changeover. Indeed, the introduction of the euro banknotes and coins proceeded far more smoothly than we had dared to expect, and I should like to take the opportunity today, on behalf of the ECB, to express once again my gratitude to the citizens of Europe and all the other parties involved for their contribution to making the cash changeover a success and for their fruitful collaboration with the Eurosystem over the past years. Review of economic and monetary developments Let me now turn to the review of economic and monetary developments. In the light of the central role of maintaining price stability that the Treaty assigns to monetary policy, I shall start by reporting that annual average HICP inflation in the euro area was 2.5% in 2001. The lagged effects of the increase in import prices in 2000, together with the impact of livestock diseases on unprocessed food prices in 2001, contributed to the increase in annual HICP inflation rates, which peaked at 3.4% in May 2001. Since then, the effects of these factors on the annual inflation rates have gradually disappeared. We are obviously not satisfied with HICP developments in the course of last year.
Both elements will mitigate the risk of financial fragmentation due to non-coordinated measures taken by the different authorities, namely, “ring fencing” initiatives. Spanish G-SIBs fully comply with the pre-conditions to be considered “Multiple Point” groups: they are organised through local retail banking subsidiaries; critical economic functions, e.g. payment systems, are organized at the local level; subsidiaries are selfsufficient in capital and funding; and they rely on separate firms detached from the bank for operational support, for instance, on information systems. So, although there are still many issues to be clarified, we think that the most realistic resolution approach for the Spanish international banking groups is the “Multiple Point” strategy, provided that, in the event of resolution, their organisational and financial structures are suitable for healthy parts to be sold or maintained as a surviving group, split from their distressed sister companies, using other resolution tools such as asset transfers or bridge banks. Now, I will go to the second main element of the new framework, the bail-in instrument. BIS central bankers’ speeches  3  Next year, most of the FSB work on resolution will focus on preparing proposals on the adequacy of G-SIFI loss absorbing capacity in resolution, namely, what we call “gone concern loss absorbing capacity” or GLAC. This concept is similar to the Minimum Requirement of Eligible Liabilities (MREL) set up in the EU Bank Recovery and Resolution Directive.