Thirdly, it is educational (and frightening) to see exactly how the shortage of liquidity brought about Enron's downfall when questions were raised regarding the quality of the balance sheet and the market lost confidence in the company. Enron's balance sheet had some similarities with that of a bank, in that the liabilities side consisted of borrowing that proved to be rather short term, while the asset side was difficult to value and had much poorer liquidity. A bank that found itself in an equivalent situation could face a run, with customers withdrawing their deposits, and this was really what happened to Enron. This makes some form of liquidation necessary, even if there later proved to be some value left in the balance sheet. The experiences of the Enron case led to investors temporarily fleeing companies with complicated constructions and ownership or companies suspected of being rather too creative in their accounting. However, this seems to be just a temporary phenomenon. Companies' credit spreads have not been affected as much as was feared and the stock market shook a little, but has begun to recover again. The effect appears rather to have been that accounting methods and procedures have been voluntarily revised, a development welcomed by both market operators and authorities alike. Perhaps the Enron case can become a further indication that the markets have actually become more robust. However, the Enron collapse also illustrates clearly some of the risks that might arise when the markets grow in both significance and complexity.

It is obvious that structural problems require structural solutions. Implementing an inflationary monetary policy would not result in lasting reductions in unemployment, but would actually serve to exacerbate the problem over the medium term. I recognise that structural reforms are not always easy to implement. The benefits are often enjoyed in the medium term, while short-term costs for some groups may mean that reforms are vigorously opposed by interest groups. Although there is a common objective of reducing unemployment, there is no common programme of reforms that will work in all countries. While it is possible to learn from the experience of others, each Member State will wish to develop workable policies that reflect its own particular circumstances. Although the path of structural reform is not always an easy one, it is the only way in which we can achieve the lasting reductions in unemployment that are so urgently needed. Only structural reforms that aim to create stable labour markets in which there is flexible interaction between supply and demand will ensure that the benefits of EMU in terms of economic growth are achieved to the maximum extent possible. Conclusions To conclude, Economic and Monetary Union provides a great opportunity to create and maintain a large zone of price stability and economic prosperity in Europe. However, while price stability is a necessary condition for fully grasping the opportunities of EMU, it is not, in itself, sufficient. Stability-oriented polices regarding the development of national fiscal positions and the functioning of labour markets are also of crucial importance.