Although differences in income levels are not incompatible with EU, it is important for accession countries to improve real convergence before entering monetary union. Indeed, it is essential to preserve a high level of economic cohesion within EMU and appropriate economic integration between Members States, thereby helping to minimize the risk and the effects of asymmetric shocks, in the best interest of accession countries themselves. Let me stress five points of particular relevance for the Eurosystem, and for accession countries themselves on the road towards achieving catching-up and convergence with the EU. •  Firstly, we should never forget that nominal convergence must be sustainable and therefore constitutes a medium-term objective, rather than a short-term priority. The strict compliance with the Maastricht criteria will be key for joining the euro area. Indeed, the EU Treaty calls, as a prerequisite for adopting the euro, for a high degree of sustainable convergence in the fields of price stability, government fiscal position, stability of the exchange rate, and longterm interest-rate levels. The sustainability of nominal convergence itself presumes that sufficient preliminary progress has been made towards real and structural convergence (and namely having set a fully-fledged market economy, catching-up in income and productivity levels, as well as economic and social infrastructures, upgrading of the legal system…). Conversely, a sustainable catching-up process requires macroeconomic stability. Therefore, nominal and real convergence should be pursued in parallel, and are not antagonistic.

The enlargement process  The coming EU enlargement to Central, Southern and Eastern Europe countries is a historic stage in European integration. Twelve countries from central, eastern and southern Europe are currently negotiating accession to the EU. According to the calendar endorsed by the European Council, new st accessions will take place as from 1 of January 2004. It testifies again, if necessary, to the  BIS Review 60/2002  3  attractiveness of the European framework, which has contributed to both political stability and economic progress for almost half a century in Western Europe. Accession countries in western Europe have accomplished remarkable progress in stabilizing and strengthening their economies and institutions. Recent history shows the major improvements those countries have made, in hardly 10 years, on the road towards convergence with the EU. Let’s keep in mind, with some humility, the sometimes rather slow pace the current Member States took, regarding for example trade openness, price liberalisation, structural reforms and even monetary stability and fiscal soundness. Nevertheless, there is also general agreement on the fact that the gap, in terms of average GDP per capita, between the accession countries and the euro area, although diminishing, remains still quite significant. The size of the gap, combined recently with a rather limited growth differential between the two groups of countries, suggests that the process of real convergence will be gradual and will have to continue much beyond the tentative dates for EU accession.