rates but also negative net migration. whatever the causes, one important answer to future challenges will be to keep older people in the workforce. fortunately, the trend toward earlier retirement has been reversed over the last decade, but more needs to be done in all countries concerned. reforms have markedly improved the sustainability of public pension systems, but old - age poverty continues to be a problem in some cesee countries, particularly for women. pension reform is, perhaps, a trial and error process, which reminds me of the famous quote by friedrich von hayek, “ the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. ” 1 indeed, designing a stable pension system without jeopardizing people ’ s confidence requires both science and art. i tried to contribute to both fields with some – but overall quite modest – success ( in particular in my own country ) but i remain determined and optimistic also in my new function. whereas cesee pensioners are staying in their countries, people of working age are emigrating. and even worse : the first to leave are the young and the most skilled, which threatens public health and productivity growth in their home countries. the challenge for cesee countries with high emigration is to turn this brain drain into a brain gain by attracting people back or recruiting immigrants from third countries. the good news is that economic history provides numerous examples of emigration countries managing to become destinations of re - migration. since economic development only becomes a pull factor when a certain minimum income threshold is reached, however, good governance and specific policies that improve people ’ s quality of life will be essential to win and keep talents. 2 good governance – an elastic concept, admittedly – applies not only to individual countries but also to european institutions. indeed, european economic integration proceeds between the poles of deepening and enlargement, as we have seen from the recent disagreement about the timing of accession talks with candidate countries before securing the eu ’ s absorption capacity. the brexit experience suggests that not even the direction of deepening and enlargement can be foreseen with precision. “ prediction is very difficult, especially about the future ” – apparently, this truism of niels bohr also applies to the negotiations among the eu member states about the deepening of economic and monetary union ( emu ). a resilient common currency needs integrated markets. completing the banking union and developing a capital markets union seems less controversial than the creation of a

taking into account what could be avoided. within the euro area, the monetary union has kept member countries from being exposed to harmful intra - european exchange rate tensions of the type that many countries used to suffer when external shocks occurred. it has become quite obvious that the countries constituting the euro area are protected from negative shocks much more comprehensively now than was possible under past regimes. indeed, major external developments in recent years, like the bursting of the equity bubble, the repercussions of the terrorist attack on september 11, 2001 and the more recent substantial depreciation of the us dollar that has resulted from the sizeable imbalances in the us economy, otherwise might have led to phases of instability within the european economy. instead, they could be weathered within a stable framework. during the past five years, the eurosystem successfully achieved its primary objective of maintaining price stability over the medium term. despite some years of rising world energy prices combined with a strong appreciation of the us dollar, the eurosystem managed to achieve low inflation and low interest rates, which will ultimately stimulate further investment and contribute to sustainable growth in the euro area. thereby, the euro will contribute to more balanced global growth and to more stability in the international financial system. the current state of the european economic and monetary union, its “ stability architecture ” and its developed rule - based “ stability culture ” truly represent a culminating point in the process of european integration. indeed, over the last half century, europe has followed an impressive path of voluntary integration of nations, so far unparalleled in history. economic integration, in particular, was successively deepened. moreover, in parallel to the process of deepening the integration, the european union was successively enlarged. at present, we are at the threshold of a further historic enlargement of the european union. the accession of ten new member states, scheduled for may 1st 2004, is of great political importance and also has non - negligible economic implications. looking into the future, there are two main challenges for the european economic and monetary union. the first challenge consists in strengthening the hitherto developed architecture and culture of stability, the second in successively integrating the incoming new member states, and both challenges are certainly inter - linked. regarding the “ stability architecture ”, the legal fundaments of the economic and monetary union have to be transposed appropriately into the treaty establishing a constitution for europe, in order to ensure that the essence of the stability orientation of the economic and