a minimum requirement for keeping the catchingup process going in the transition economies. but i am afraid that we have become very selective in our perception of central and eastern europe. we tend to take note only of certain developments and give some good advice. and sometimes i have moreover the impression that we easily fail to appreciate the enormous progress that has already been made in most of the transition countries, especially in those which are most advanced in reforms and transformation. ladies and gentlemen! the policy issues for a smooth further integration of accession countries into the european system of central banks and finally into the eurosystem were recently addressed at the " east - west conference ", organized by the oesterreichische nationalbank and the joint vienna institute, and at the high - level " vienna seminar on the accession process ", a specific conference of the eurosystem held here in vienna. i am convinced that the conclusions of these seminars will provide helpful guidelines for the years to come. the main conclusions are : • accession countries will need to further advance the process of bringing down inflation rates, while not delaying the much needed relative price adjustments within the economy. such price adjustments are part of the transition process and of structural real convergence and will typically entail inflation rates that will, for some time, range above those prevailing in the euro area. • the objectives of nominal and real convergence should be pursued in parallel. progress in nominal and real convergence will imply an orderly closing of the gap between the accession countries and the euro area economy, both in terms of per capita income and price levels. in order to reinforce each other, nominal and real convergence paths must be properly sequenced and mutually balanced. a fast - track move towards full nominal convergence and, in particular, towards complete monetary convergence could prove counterproductive in the pre - accession period. • an important element of structural real convergence is the further development of financial services structures, which were practically non - existent when transition started a decade ago. the main tasks are bank privatization, the development of a sound credit culture and the transformation of banks into efficient and competitive financial intermediaries. the three pillars of a functioning banking system are a high - quality corporate governance of banks, a market discipline in accordance with best - practice standards and an efficient banking supervision. in the transition economies, banking supervision should typically be located with the central banks, at least for the time being, as central banks have the necessary funds to perform this task, have established reputation and are, in any case

reached its highest level in a decade and unemployment shows a clear downward trend. budgets have been fairly consolidated and structural reforms are under way. if this development continues, i am confident that the future of the euro is indeed very promising. moreover, it may be said that the single currency is the basis for a stable and prosperous economic climate in the euro area, which also has a positive effect both on our neighbours and eu applicant states and for the global economy. the euro was conceived as a tool to promote further european integration and to strengthen the european economy. and it has done so. thus, the euro is a stable anchor for europe and the international financial system. ladies and gentlemen! let me now turn very briefly to austria ’ s experience with full integration in the european union. over the past decades, austria has become one of the leading small open economies in europe, ranking above average in terms of growth performance. the slowdown in economic growth recorded in the mid - 1990s ( i. e. between 1993 and 1996 ) can be traced to the general economic development in the european union as well as to the adjustment costs resulting from austria's accession to the european economic area and to the eu. in addition, a powerful process of structural consolidation was in full swing and manifested itself in an extraordinarily high number of insolvencies. but from 1998 onwards, annual growth climbed to its medium - to long - term path of 2. 5 % to 3 %. moreover, austria was able to augment its share in eu exports to 3. 1 % by 1999 ( 1995 : 2. 9 % ). at 3. 1 %, austria's unemployment rate was the third lowest in the european union in november 2000. youth and long - term unemployment were also kept at comparatively low levels. the employment rate of 15 - to 64 - year - olds, measured in terms of full employment, is one of the highest in europe. and the outlook for the labor market remains bright. the favorable economic development, active employment policies as well as the gradual removal of structural rigidities all foster employment. the dialogue between the social partners has certainly facilitated the favorable development of unit labor costs. in the 1990s, austria's industrial productivity augmented by 5 %, the third highest rate among oecd countries, whereas the growth rate of industrial unit labor costs was 5 % lower than that of its main trading partners. moreover, austria has been more successful than other countries in avoiding the loss of human capital