CONTENTS

EDITORIAL
ECONOMIC AND MONETARY DEVELOPMENTS

The external environment of the euro area
Monetary and financial developments
Prices and costs
Output, demand and the labour market
Exchange rate and balance of payments developments

Boxes:
- The results of the January 2005 bank lending survey for the euro area
- External capital flows and domestic monetary dynamics in the euro area
- Fixed rate and variable rate longterm debt securities issued by euro area residents
- Private sector expectations for inflation and economic activity in the euro area: results of the Survey of Professional Forecasters for the first quarter of 2005 and other available indicators
- The (un)reliability of output gap estimates in real time

ARTICLES

Bank market discipline
Initial experience with the changes to the Eurosystem's operational framework for monetary policy implementation
Euro area balance of payments and international investment position vis-à-vis main counterparts

EURO AREA STATISTICS
CHRONOLOGY OF MONETARY POLICY MEASURES OF THE EUROSYSTEM
DOCUMENTS PUBLISHED BY THE EUROPEAN CENTRAL BANK SINCE 2004
GLOSSARY