To enter the Eurozone is a very important, very grave and irrevocable act. Neither the accession country concerned nor the Eurozone could afford the risks associated with a mistaken decision. •  Thirdly, accession countries must strengthen their fiscal and external positions. Given the aim of attaining real convergence over time, accession countries will have to devote significant public resources to funding investment. However, candidate countries’ weighted average public deficit amount to 3.6% of GDP in 2001. The fiscal consolidation currently planned by some accession countries is welcome and likely to require sizeable expenditure cuts or tax increases. Looking ahead, accession countries will have to implement fiscal consolidation very credibly with a view to avoiding the risks associated with the existence of high “twin deficits”, i.e. fiscal and external. •  Fourthly, a sound and efficient banking and financial system is key. Significant progress has been made over the past few years in rehabilitating the banking sector and encouraging foreign ownership. The latter has also contributed to greater integration into the EU financial system. Nevertheless, adapting the legal and regulatory framework is a process entirely in the hands of the accessing countries. The intermediation role of the banking sector remains fundamental for the efficient use of capital and sustained growth. Progress in corporate governance, the enhancement of the legal and supervisory frameworks that support the banking sector, and an efficient fight against money laundering, are also crucial. These improvements are conducive to achieving the macroeconomic objectives of the accession countries.

What’s more, the national supervisors will continuously carry out centrally steered checks to make sure that these institutions, which are often essential to the financing of the local economy, do not as a group pose any relevant risk. Additionally, we have identified, besides the 120 largest banks, 100 others that we will keep a close eye on. We do so because they are either regionally relevant, in bad shape or have specific business models. Will restoring robustness and transparency in the banking system suffice to start credit flowing again in the euro area? With a robust and resilient European banking system, we move a big step forward. Although such a banking system is a necessary condition for sustainable credit growth, it is not the only condition for banks to increase lending to the real economy. At the national level, structural reforms are required that will help firms to regain competitiveness and become sound enough for banks to lend to them. Banks take credit risk when lending to the real economy. They need to be convinced that their customers, such as small and medium-sized enterprises, will make enough profits to repay the loans they receive. The growth prospects for national GDP as well as economic and structural factors such as labour market rules and sound fiscal budgets are therefore relevant criteria for banks’ decision to do business. The ECB will, from now on, have two missions: steering monetary policy and supervising banks. How will a conflict of interests be avoided?