of adjustment. indeed, it is worth noting that the latest enlargement took place after many years of careful preparation. with regard to turkey, politically, there has been some opposition to that country ’ s entrance. however, the eu has to honour its existing commitments towards countries already in the process of negotiations, provided that countries can fulfill all the necessary conditions. turkey has continued to make progress in reforms. however, the pace has slowed during the past year. significant further efforts are needed to fulfill fully the copenhagen political criteria. in particular, concrete steps are needed for the normalization of bilateral relations with all eu member states. all three countries should ultimately be admitted into the eu but sufficient time should be allowed for the necessary reforms to be implemented. their dates of entry into the union depend on the results of their reforms. each country will be judged on its own merits. 3a. what should be the next round of enlargement? potential candidates are the remaining countries of the western balkans, that is albania, bosnia and herzegovina, montenegro, and serbia, including kosovo. that the future for these countries holds the prospect of eventual eu accession is widely acknowledged and has been mentioned on several occasions, for example by the european council in feira in 2000 and the eu - western balkans summit in thessaloniki in 2003. each of these countries will be invited to join the eu once the accession criteria have been met. nevertheless, this group of potential candidate countries still has some way to go before reaching that point. the speed of accession is determined by how quickly countries meet the political and economic criteria. the political criteria require that countries ensure the stability of institutions guaranteeing democracy, the rule of law, the protection of human rights and respect for, and protection of, minorities. the two basic economic criteria are, first, the establishment of a functioning market economy, and, second, the ability to withstand competitive pressure in the union. meeting these basic criteria requires determination and time. economic reforms have been initiated – and are progressing – in many of these countries. nevertheless, these countries continue to face challenges. they are, however, making genuine transition efforts and, given sufficient time, i expect they will be able to prepare their economies for membership. the recently acceded member states have proved that this is possible. 3b. although the speed of further enlargement of the eu depends on the pace of reforms in candidate, or potential candidate, countries, this process is only one part of the eu ’ s enlargement

. therefore, it is essential to establish an effective framework for macroprudential supervision that will ensure both the systematic analysis of risks and the formulation of policies to address such risks. the state of the greek economy the economic slowdown has been less severe in greece than in many other european countries. however, this outcome reflects factors that, if left untreated, will reduce growth potential in the medium term. specifically, the performance of the greek economy during the crisis reflects the relatively - low level of openness and the deterioration of public - sector balance sheets from a position that was already worrisome prior to the onset of the crisis. a factor that has, however, supported the greek economy has been the soundness of its banking system. greek banks have been free of toxic assets and their exposure to the emerging economies of south - eastern europe has remained within manageable limits. a recent stress test conducted in close cooperation with the imf has reaffirmed the soundness of the greek banking system. the relatively - high growth rates experienced by the greek economy since its entry into the euro area reflect a catching - up process. to sustain a robust growth rate in the future, greece will need to address several key challenges, reflected in persistently very large currentaccount imbalances, high fiscal deficits, and worrisome debt levels. these imbalances are the result of structural rigidities, which have undermined competitiveness over time. to restore competitiveness and remove the imbalances, a dual agenda needs to be concurrently implemented : first, a multi - year program of fiscal consolidation, which can reduce risk premia and crowd - in private investment, raising the growth potential of the economy ; second, bold and wide - ranging institutional reforms in the public sector and structural reforms in product and labor markets, which can enhance productivity and raise the employment rate. only by undertaking these reforms will the greek economy be able to become more competitive and increase its growth potential and the prosperity of its citizens. the broad support received by the newly - elected government will greatly facilitate the implementation of the reform agenda.