' monetary policy strategies, exchange rates play a vital role and, wherever they are not a formal or informal intermediate target, they are at least a key monetary policy indicator. in nearly all cases it is the euro upon which the ceecs'currencies are oriented, or to which they are formally linked. european integration will only be truly successful if it reaches out to the whole of europe. it is the concept of stability orientation that urges us to complete european unification. if we manage the enlargement process successfully, this will also be conducive to our endeavor to guarantee stability for the whole euro area. such a mutual improvement is desirable in a very broad sense : political stability, financial market stability, macroeconomic and – in the particular interest of the eurosystem – price stability. there is no doubt that enlargement will encourage stability, growth and employment in a wider europe. there is a consensus that the accession countries will reap substantial growth and employment benefits from their membership in the european union. still, let me also add a word of caution in this context : it may take quite a while before new entrants will be in a position to fully harvest these benefits. a fair share of realism is called for to avoid disappointment. the countries of central and eastern europe have made successful and impressive progress on their way to eu membership. yet more remains to be done. sustainable monetary, fiscal and structural policy reforms are of prime importance in this context, as they help to establish the required real convergence with the european union – a precondition for smooth accession to the eu. these reforms comprise, for example, sustainable low rates of inflation, sound public finances, stable currencies, flexible labor markets and efficient financial markets. finally, the central and eastern european countries involved in accession negotiations will be confronted with the basic question of how economic and monetary union features in the overall context of enlargement. as far as we can judge today, we see the economic and monetary policy integration of the candidate countries proceeding in three steps : in a first step, the candidates will accede to the european union, then they will participate in erm ii, the exchange rate mechanism of the union, and in a last step, they will introduce the euro as their national currency. let me point out very clearly that the fulfillment of the maastricht convergence criteria is not a prerequisite for membership in the european union. but, of course, this does not mean that the

financial system to take all over europe. he is therefore in a vanguard position to shed light on some of the challenges we are most likely to face on the road ahead. thank you very much for joining us today. ladies and gentlemen, one of the key tasks central banks have is to ensure stability. regardless of how stability is defined, it is inextricably linked with a longer - term orientation. looking back at the 200year history of our bank last year, we were reminded of the many unforeseen events that had unfolded during the past two centuries. and this will become manifest in an even broader perspective when we celebrate the centenary of the establishment of the republic of austria next year. times change, and time and again we realize how flawed our efforts are at predicting the future. public institutions that are committed to maintaining stability are invaluable because, in a long - term perspective, uncertainty about the future seems to be one of the few constants in life. today, technological innovation is an ever - present factor, but we should be wary of drawing deterministic conclusions from it. structural changes in our economic system have exhibited a remarkable tendency to prove unpredictable. it seems that the only thing we can be certain about is uncertainty. this applies both to the future path of innovation and the future sources of financial crises. former u. s. secretary of defense donald rumsfeld is well remembered for his referral to “ known knowns ” as distinct from “ known unknowns ” and “ unknown unknowns ”. i in economics, these distinctions are well known, although under different names – certainty, risk and uncertainty. for a central bank, committed to representing an anchor of stability, the main orientation points which guide its behavior in an uncertain world are of a macroeconomic nature : economic growth prospects, population trends and the distribution of the fruits of growth. with respect to growth, the recovery in the wake of the financial crisis has been modest by historical standards. strong savings, modest investment activity and a continuing debt overhang have led some observers to expect a period of secular stagnation. i do not share this gloomy perspective, but i agree that we cannot expect a return of growth rates comparable to those seen in europe during the two decades of reconstruction after the second world war. let me turn to population trends to illustrate that unforeseen events do not always imply a need for a downward revision of expectations, but can instead require an upward adjustment. a decade ago