It has fostered both price and macroeconomic stability through its credibility and has shielded many euro area countries from significant exchange rate volatility and financial market turmoil. It is all the more important to acknowledge these achievements since it was said in some quarters that the euro would never see the light of day or that it would create severe economic disruptions. Those scenarios have not materialised. In the post-war European adventure, the euro represents a major milestone. That said, and whatever its own merits, a currency is not an end in itself, even though the new EU members are keen on adopting it as soon as possible. Entry into Monetary Union must be founded on a sustainable convergence process. Enlargement of the euro area also gives renewed impetus to addressing the challenges ahead as it makes it more pressing for policy-makers to tackle long-ignored weaknesses. This is a crucial contribution to building a stronger EU, in which I strongly believe. All in all, let me express my confidence in the future of the euro and of the single monetary policy of a large Eurozone.
Figure 1: HICP inflation in the euro area  16 14 12 10 8 6 4 2  05  03  20  20  01  99  20  19  97  95  19  19  93  91  19  19  89  87  19  19  85  83  19  19  81  79  19  19  77  19  75  19  19  19  71  -2  73  0  Source: ECB - M. Ehrmann and F. Smets (2005). Note: The chart shows quarter-on-quarter (red) and year-on-year (blue) inflation, and its average value over three sub-periods that have been identified by breakpoint tests. 8  BIS Review 4/2006  Figure 2 ECB Survey of Professional Forecasters: Expected inflation at various horizons (average) % 2,8 2,6 2,4 2,2 2,0 1,8 1,6 1,4 1,2 1,0 1999q1 1999q3 2000q1 2000q3 2001q1 2001q3 2002q1 2002q3 2003q1 2003q3 2004q1 2004q3 2005q1 2005q3 n  n+4  Q+4  Q+8  Source: ECB – Production: Banque de France – update October 2005.