of a member state or from any other body. likewise, rights of third parties to approve, suspend, annul or defer central bank decisions on escb - related tasks are incompatible with the eu treaty. the same is true of any rights to censor such decisions on legal grounds. personal independence is about ensuring tenure for members of the escb ’ s decision - making bodies by minimum terms of office and giving protection against arbitrary dismissal. to make this latter aspect more concrete, a central bank governor may be relieved from office only if he or she no longer fulfills the conditions required for the performance of his or her duties or if he or she has been guilty of serious misconduct, with the possibility of appeal to the european court of justice. financial independence, in essence, denotes that central banks have to be in a position to avail themselves of the appropriate means to ensure that they can properly fulfill their escb - related tasks. those applicant countries which engaged in accession talks with the european union in 1998 - among them the czech republic - already dealt, in detail, with the issue of central bank independence during the membership negotiations last fall, when the chapter “ economic and monetary union ” was on the agenda. progress in the candidate countries on this issue is being monitored very closely by the european union at large and by the european system of central banks in particular. let me now shortly sketch the second and the third step of the prospective monetary integration of the central and eastern european applicant countries. upon joining the european union, the new member states are bound to the fulfillment of a number of emu - specific obligations : they obligate themselves to orient their overall policies, and specifically their economic and monetary policies, toward the objectives of emu, and they must endeavour to make progress toward meeting the convergence criteria stipulated by the maastricht treaty. they participate in the economic policy coordination process within the eu, are compelled to avoid excessive budget deficits, and commit themselves to present convergence programs on a regular basis. with a view to their eventual participation in the euro area, these new members are expected to gradually adapt their monetary policy instruments to escb standards. eu membership also includes the obligation to treat exchange rate policy as a matter of common interest. among other things, this means that the newly acceding countries are expected to join the exchange rate mechanism of the eu. they need not necessarily participate in this exchange rate system immediately upon joining the european union, but, depending on the specific circumstances in the individual candidate

countries, this step may also be taken later. the prerequisite for the last step 3 adopting the euro and thus participating fully in emu - requires sustainable fulfillment of the maastricht convergence criteria. fulfillment of the criteria is ascertained using a procedure set out in detail in the treaty on european union. one aspect of fulfillment is the maintenance of price stability as the primary objective of central banks. not only institutional and legal aspects as well as the principle of equal treatment, but also economic considerations strongly suggest the step - by - step procedure i have sketched out. adopting the euro too early could place severe strains on such countries ’ economies, and perhaps even trigger substantial and lasting disturbances. such a course of action would be in the interest neither of the current euro area members, nor of future members of the euro area. still, an early introduction of the euro is sometimes presented as a panacea to all the economic ills and in particular to the still existing structural weaknesses in central and eastern europe. in my view, this is a grave delusion. structural problems can simply not be solved by monetary policy measures, they have to be corrected by creating proper incentive structures, transparent rules and functioning institutions. all this takes time. simplistic quick fixes or “ shortcuts ” will certainly not do the job, but will instead significantly add to existing difficulties. therefore, ladies and gentlemen, let me draw the conclusion that the key challenge facing the applicant countries in the next few years, consists in strengthening their market economies and their competitiveness by firmly pushing ahead with structural reform and by subsequently adopting the community acquis in the process. only on this basis will the eu candidate countries from central and eastern europe be able to attain durable and sustainable macroeconomic stability, and only by taking these steps will they ultimately be able to fulfill, in a lasting manner, the prerequisites for participation in the euro area.