lucas papademos : on the road to the euro - progress and prospects of the new member states speech by mr lucas papademos, vice - president of the european central bank, at a panel discussion at the conference : the ecb and its watchers viii, frankfurt am main, 5 may 2006. slides to the speech can be found on the ecb ’ s website. * * * i. introduction the progress and prospects of the new member states on the road to the euro is obviously a very topical issue. as you know, slovenia and lithuania have asked the european commission and the ecb to prepare reports as part of an examination of whether they have achieved “ a high degree of sustainable convergence ” in accordance with the treaty. the convergence reports on these two countries will be published on 16 may. of course, i cannot discuss the substance of our convergence assessment of these two countries now, only days before the publication of our reports. however, there are many important and pertinent issues related to the general theme of this session that could, and should, be usefully discussed at this juncture. let me start by recalling that all of the new member states that joined the eu in 2004 are committed to adopting the euro, as soon as they fulfil the conditions set out in the treaty. none of them has an optout clause, as is the case with denmark and the united kingdom. indeed, all of the new member states aim to adopt the euro over the next few years because of the expected benefits and opportunities that it will entail. the envisaged time schedules for entry into the euro area, as announced by the new member states, are somewhat diverse, but they all currently plan to introduce the euro by the end of the decade, at the latest ( see slide 3 ). a number of them have set concrete target dates in the years to come, while others have stated their envisaged euro adoption dates in more vague terms. in this context, let me emphasise that revising a target date in a pragmatic manner – as estonia recently did – should not be perceived as a sign of failure. rather, it should be seen as a sign of political realism and economic prudence in the light of the latest facts and assessments of current circumstances and likely prospects. what are the prospects for euro adoption by the envisaged target dates? what are the main pertinent policy issues and challenges for the new member states? with regard to the first

after a gradual winding - down of our net asset purchases. accordingly, at its last monetary policy meeting the governing council confirmed that it continues to expect the key ecb interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. the governing council also decided to reduce the monthly pace of the net purchases under the asset purchase programme ( app ) to €15 billion from october until the end of december 2018 and anticipated that, subject to incoming data confirming our medium - term inflation outlook, net purchases will then end. finally, the governing council also confirmed its intention to reinvest the principal payments from maturing securities purchased under the app for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. significant monetary policy stimulus is still needed to support the further build - up of domestic price pressures and headline inflation developments over the medium term. this support will continue to be provided by the net asset purchases until the end of the year, by the sizeable stock of acquired assets and the associated reinvestments, and by our enhanced forward guidance on the key ecb interest rates. in any event, the governing council stands ready to 1 / 3 bis central bankers'speeches adjust all of its instruments as appropriate to ensure that inflation continues to move towards the governing council ’ s inflation aim in a sustained manner. the financial health of the euro area banking sector has continued to improve. although showing a slight decrease from 14. 6 % at the end of 2017, the aggregate common equity tier 1 ratio of euro area significant institutions stood at 14. 1 % at the end of the first quarter of 2018. banks have made progress in reducing their stocks of non - performing loans ( npls ). in the first quarter of 2018, the npl ratio for euro area significant institutions dropped further, to 4. 8 %, compared with 5. 9 % a year earlier. however, euro area banks ’ profitability remains subdued. the average return on equity of euro area significant institutions declined to 6. 6 % in the first quarter of 2018, from 7. 1 % a year earlier. in this context, eu and national authorities are still following up on a comprehensive action plan for dealing with legacy asset quality issues