, is likely to face inflationary pressures that could derail the economy from a sustainable convergence path after euro adoption. top priority must therefore be given to the sustainable economic convergence of the slovak economy towards the more mature countries of the euro area. this certainly cannot be seen as an automatic outcome of joining the euro area – indeed, it will require major efforts in the years to come from all parties concerned. we appreciate the fact that the slovak authorities have firmly committed themselves to pursuing appropriate supportive policies – ones which aim in particular to maintain sustainable convergence, underpin external competitiveness and strengthen economic resilience. fulfilling these commitments is vital for the slovak economy to function smoothly within the euro area. let me stress three areas that we consider crucial for preserving sustainable convergence in slovakia. firstly, after euro adoption, when monetary policy is no longer autonomous, a rigorous and credible implementation of fiscal policy in line with the stability and growth pact commitments is essential to contain inflationary pressures in the economy. to this purpose, the fiscal adjustment in structural terms must be at least 0. 5 % of gdp per year until the medium - term objective is reached in 2010. secondly, the functioning of slovakia ’ s labour market must be further improved and the high structural unemployment reduced. while the reform of the educational system might help to reduce unemployment in the medium term, making labour legislation more flexible as well as eliminating existing wage rigidities would help to alleviate pressures in the labour market more rapidly. any temptation to introduce wage indexation schemes should be resisted ; social partners should focus on labour productivity growth and competitiveness as the main factors in any wage adjustments. refraining from any kind of mechanical wage indexation is particularly important today to avoid any spillovers from the recent more elevated levels of inflation to wages and salaries. thirdly, the authorities must also focus on further improving the business environment in slovakia in order to enhance productivity growth and continue to attract foreign capital. the strengthening of the competitive environment should be seen as a prerequisite for any further initiatives. commitment by all policy actors is key. only a decisive approach by the government and social partners in these areas would, in our view, help to keep slovakia ’ s inflation on a sustainable track in the future. the slovak authorities must be ambitious in pursuing sound economic policies that, jointly with the stability - oriented policy of the ecb, will bring sustainable economic growth, job creation and social cohesion for the people of slovakia. 3. preparations for the changeover the ecb values the

money which ensures that central bank and commercial bank money are fully aligned in nominal ( and real ) value terms. in normal times, that should take care of the needs of the non - bank sector because the liquidity should reach where it is needed via banks. but in times of stress it may not. to avoid a systemic crisis, and reflecting the growth of the non - bank sector, central banks should consider permanent emergency facilities for non - banks. but these should not be standing facilities, because the value of money is not the issue here. non - banks cannot decide when they would like access to the central bank. rather the central bank can trigger or activate these facilities if it senses stressed conditions and their possible economic consequences warrant such action. but these facilities are temporary in their availability and should be unwound and repaid as soon as possible. i think this deals with harold james's point about short and long - run consistency. you may already be aware that at the bank of england this is what we are doing, by putting into place emergency facilities for a range of non - banks which we consider exposed to the systemic risks that should call the use of such facilities into action. but to reiterate, these are not standing facilities of the traditional sort. minsky's analysis is pertinent today as memories of the global financial crises recede and the discussion moves on to putting more emphasis on growth and competition in economies and the role of finance in these objectives. to be clear, these objectives are important, no doubt about that. but we have learned from hard experience that we can only achieve them with a foundation of financial stability. there isn't a trade - off. the best contribution we as financial stability policymakers can make to sustainable economic growth is to ensure that the financial system is resilient when shocks hit. that foundation requires confidence in the nominal value of money and therefore it's singleness. money and finance are different and should be treated as such. profits and 4 / 5 bis - central bankers'speeches some losses should be made as the normal state of affairs. we should not use regulation to limit these outcomes beyond enabling efficient markets with strong institutional foundations and well - established rules of the game. but as authorities, it is our job to intervene to prevent damage to the foundations of financial stability which could in turn compromise economic growth. those interventions can be continuous in the sense of regulations or emergency and temporary where the threat is so great and costly that it