clear that further structural reforms are needed in the accession countries before they are ready to join the eu. the framework provided by the copenhagen criteria is intended to ensure this structural convergence. it is a necessary precondition to advance the process of real convergence in the accession countries. see havrylyshyn et al. ( 1999 ), “ growth experience in transition countries 1990 - 1998 ”, imf occasional paper no. 184, washington d. c. ; imf, ( 2001 ), “ a decade of transition : achievements and challenges ”, washington d. c. 4. accession to emu before sustainable convergence has been achieved could prove to be disadvantageous both for the candidate countries concerned and for the union as a whole. for example, forgoing the possibility of using the exchange rate as an adjustment instrument would be problematic if an insufficient degree of convergence has been attained. the competitiveness of the candidate countries could even be jeopardised. it is therefore vital that the copenhagen and maastricht criteria for enlargement are actually fulfilled. before central and eastern european countries, malta and cyprus can participate in emu, it really needs to be a case of maastricht meeting copenhagen. 5. the unilateral introduction of the euro as legal tender ( euroisation ) is out of keeping with the route to membership in monetary union foreseen in the ec treaty. the treaty requires all candidate countries to adopt the acquis communautaire in its present form. this means that all candidates must comply with the stages leading to adoption of the euro provided for in the treaty.

a result of the catching - up process, the accession countries will probably find their equilibrium real exchange rates increasing in the years ahead. 3. as inflation rates in some accession countries are still considerably different from those in the current eu countries, the exchange rate regime must also take account of the risk of higher current account deficits and of competitiveness. in the transition period from eu accession to joining emu, efforts must therefore focus on the consistency of exchange rate strategy and macroeconomic policy. participation in the exchange rate mechanism is only appropriate if pegging the exchange rate more closely to the euro is in line with the general macroeconomic situation. in my opinion, the european exchange rate mechanism is an adequate way of preparing for adoption of the single currency. this mechanism can help to limit exchange rate fluctuations in a credible multilateral system, without preventing a certain degree of exchange rate flexibility. however, it should be noted that there may be cases, in which even the broad bands of erm ii may not be wide enough to accomodate the necessary exchange rate adjustments during the integration process. this may be due, for example, to liberalisation measures or persistent changes in the relative see frankel, j. ( 1999 ), “ no single currency regime is right for all countries or at all times ”, nber working paper no. 7338, cambridge. see von hagen et al. ( 2001 ), “ sustainable regimes of capital movements in accession countries ”, presented at the bundesbank conference held in eltville on 26 - 27 october 2001. see wolf, h. ( 2001 ), “ exchange rate regime choice and consequences ”, presented at the bundesbank conference held in eltville on 26 - 27 october 2001. prices. it is therefore best to wait until the initial impact of eu accession is over before taking part in erm ii. this is the best way to avoid speculative attacks. this is particularly true of the present free floating currencies, whose proponents consciously stress exchange rate flexibility or the advantage of an autonomous monetary policy. premature participation in the exchange rate mechanism could prompt the foreign exchange markets to “ test ” this mechanism. in countries which have already maintained a fixed exchange rate peg to the euro for some time, it is argued that the current high degree of integration is “ relaxed ” by accession to erm ii, in other words by adopting an exchange rate band. this could lead to the risk of distortions. but in this context it should be taken into