second pillar is intended to reveal this information, giving policymakers greater insight into shorter - run price dynamics and their implications for monetary policy. monetary policymaking in the euro area has to reflect the complexities and uncertainties which surround the transmission mechanism of monetary policy in a wholly new economic entity. these uncertainties imply that no single approach is likely to be entirely reliable. the inherent uncertainty faced by the central bank cannot simply be wished away. reliance on a single indicator or forecast, or a single model of the economy or view of the world, would, in these circumstances, be extremely unwise. the strategy needs to incorporate the full range of relevant indicators and assess them in the context of a variety of different models. in this respect, the two pillars complement one another. they allow for a structured cross - checking of the evidence and analysis underlying policy decisions, encompass all information and allow for various views of the structure of the economy. the academic literature and other external commentators are slowly coming to recognise the importance of “ robustness ” in monetary policymaking - something which i believe has been understood by central bankers for some time. a successful monetary policy is not one that performs “ optimally ” in the context of a specific model or given a particular view of the world. in the light of our limited understanding of how the economy works, no single model is reliable enough. rather given the great uncertainty faced by central banks - a successful monetary policy should perform well in a broad range of possible situations and across a variety of models or views of the world, each one of which may capture important aspects of actual economic behaviour or may, ex post, turn out to be close to reality. monetary policymaking is therefore complex. the two - pillar strategy chosen by the eurosystem where these pillars represent distinct, yet complementary, approaches - captures this complexity in an honest and genuinely transparent manner. this naturally brings me to transparency - a topic of considerable and ongoing debate in the euro area. in my view, the transparency of the monetary policy process is best understood as the extent to which the external, presentational role of the strategy is consistent with the internal, decision - making procedure. as a party to both the decision - making and the presentation of the single monetary policy, i can assure you that the correspondence between the internal and external aspects of the eurosystem ’ s strategy is extremely close. discussions in the governing council take into account, on the one hand, an analysis of monetary developments and their implications for monetary

slovakia was 5. 6 %, significantly above the average economic growth in the euro area. this resulted in real economic convergence as the gdp per inhabitant in purchasing power parity terms as a percentage of the gdp per inhabitant of the “ euro area ” increased from below 44 % in 2000 to above 62 % in 2007. the good times for the slovak economy are exemplified by rising real incomes. importantly, the gains in prosperity have also spread beyond the country ’ s economic heart in bratislava, even though considerable disparities between regions still exist. slovakia has experienced only limited external economic imbalances in recent years. the current account deficit remained relatively contained in the past few years and, due to increasing export capacities, it has in fact been shrinking lately. unit labour costs have until recently favoured the competitiveness of slovak producers. the koruna has participated in the exchange rate mechanism ii since november 2005. the underlying strong macroeconomic performance has led to a gradual appreciation of the nominal exchange rate against the euro, without impairing the competitiveness of slovak exporters. reflecting strong macroeconomic fundamentals, the central parity of the slovak koruna against the euro was revalued by 8. 5 % and 17. 65 % in march 2007 and may 2008, respectively. economic progress in slovakia has been based on a series of structural reforms. the substantial reforms of taxes and social benefits together with a greater flexibility in product and labour markets have brought slovakia to the attention of foreign investors. the ensuing inflow of foreign direct investment has boosted the economy and promoted rapid real gdp growth. and these days, more than ever, the pace of reforms from earlier years has to be maintained in order to reap all the benefits of euro adoption. 2. sustainable convergence is key euro adoption by slovakia implies that the benefits of the single market will be further enhanced by the single currency. the euro offers a credible framework for price stability as it removes exchange rate uncertainty within the euro area. slovakia will benefit from the stability - oriented policy of the ecb, which will help to anchor inflation expectations. furthermore, euro adoption may help to shield slovakia, a small and highly open economy, against the effects of international financial turbulence, which often has disproportionate effects on smaller economies. however, for the euro to remain a success story in slovakia, the national authorities will need to be very alert and pursue ambitious economic policies on all fronts. our main concern is that slovakia, being a catching - up economy