allow me to whet your appetite for these issues with a few preliminary thoughts. clearly, short - term and medium - term economic prospects depend on factors such as the stance of fiscal or monetary policy, the movements in commodity prices and / or global economic activity. however, the degree of long - term economic success is ultimately determined by the progress in structural and institutional reforms. these include, for instance, the creation of a business environment conducive to investment and entrepreneurial initiative ; incentives for the formation of human capital ; investment in education and research ; competition policy ; and appropriate policies concerning labour markets and social security systems. these are significant issues that deserve attention, and not only in the eu member states that seek to adopt the euro in the future, but also in the current euro area countries. on the road to the euro, convergence and stability are key objectives - hence the title of our conference. i view real and nominal convergence as interdependent processes, which can be mutually reinforcing. indeed, by fostering real convergence through structural reforms, thereby improving the supply - side of the economy through enhanced flexibility in goods and labour markets, nominal convergence will also be enhanced. likewise, by advancing nominal convergence, anchoring inflation expectations and reducing the inflation bias, prospects for economic growth and thus real convergence will improve. the role of macroeconomic policies in general, and the stability - oriented policy framework of the union in particular, is to make sure that the dynamics of the economic, financial and monetary integration process do not jeopardise an orderly convergence process. it is in this light that participation in the erm ii and the fulfilment of the maastricht convergence criteria should be seen. eu membership is not sufficient to ensure continued economic success and real economic convergence of the new eu countries with the older member states. there is a risk that reform fatigue will set in after eu accession, because the incentive for reform may no longer be as strong as before. at the same time, i would expect further pressures for reform to come from increased competition within the single market which is now confronting domestic producers ; from the limitations on state aid and public subsidies that are laid down in the acquis communautaire and are applied by the european commission ; and from the constraints on macroeconomic policy which derive from the objective of all new member states to adopt the euro. to what extent these expectations are justified and, more importantly, what can - or should - be done

lucas papademos : the new eu member states - convergence and stability opening address by mr lucas papademos, vice president of the european central bank, at the third ecb central banking conference “ the new eu member states : convergence and stability ”, frankfurt, 21 october 2004. * * * ladies and gentlemen, “ this is the third time. i hope good luck lies in odd numbers. ” so wrote william shakespeare, and i am quoting him as a fitting reference for our conference : this is the third ecb central banking conference to which i welcome you all. after the ecb conferences in the years 2000 and 2002, entitled, respectively, “ why price stability? ” and “ the transformation of the european financial system ”, we chose as the topic of this year ’ s conference “ the new eu member states : convergence and stability ”. i speak on behalf of all my colleagues on the executive board and all ecb staff involved in the preparation of this conference when i say that we are delighted to host such a distinguished group of academics and policy - makers here in frankfurt. obviously, in 2004 - the year of the historic enlargement of the european union with ten countries of central, eastern and southern europe - our theme is a very topical one. for that very reason it is also a difficult one : a plethora of academic conferences and gatherings of policy - makers have examined the issues related to eu enlargement. that said, i believe that the subjects and the quality of the papers to be presented, the impressive expertise and experience of our speakers, discussants, chairpersons and panellists will provide a particularly “ fertile ground ” to nurture fruitful debates, enhance our understanding and generate new ideas regarding the topics we will address. so what can we look forward to today and tomorrow? the headings of the three sessions provide the framework to structure our discussions. 1. after enlargement - where do we stand? we will start off by devoting this afternoon to the economic and structural transformation of the new eu member states. and i am very grateful indeed that christian noyer has kindly agreed - at very short notice - to replace eugenio domingo solans ( who unfortunately could not join us ) as chairman of this session. on the basis of the paper by gerard roland, we seek to ascertain where the new eu member states stand today, with regard to nominal and real convergence, and in particular their institutions and market structures. i find it very useful