adoption of the euro by the new member states will be introduced ; while, at the same time, there will be no relaxation of the criteria laid down in the treaty. following the publication of the convergence reports, consultation of the european parliament and a discussion among the eu heads of state and government, the ecofin council will decide, on the basis of a commission proposal, which member states fulfil the necessary conditions to adopt the euro. in case of compliance with the convergence criteria, more practical arrangements will then be set in motion, relating, for example, to the integration of the national central banks into the eurosystem and to the cash - changeover procedures. the fact that already today the ncbs of all the eu member states participate actively in committees and other meetings within the framework of the european system of central banks will facilitate this process. i cannot, and will not, pre - empt the analysis of the forthcoming convergence reports. let me stress, however, that once one economy fulfils all the convergence criteria set out in the treaty in a sustainable manner, i have no doubt its participation in the euro area will be highly beneficial for all parties. i thank you for your attention.

term. cross - checking the monetary analysis with the economic analysis therefore supports the case for vigilance to ensure that the risks to price stability over the medium to longer term do not materialise. the preservation of a solid anchoring of inflation expectations for the euro area as a whole at levels in line with price stability, as reflected in available surveys and indicators, has contributed to a sustained decline in risk premia across the whole maturity spectrum since the creation of the euro, thereby leading to lower levels of both short and long - term interest rates. the ecb ’ s high level of credibility and its stability - oriented policy have contributed to the very favourable financing conditions observed over the past few years for investors. they have also preserved the purchasing power of consumers, which is of greatest importance for all people and especially those with low incomes. it is essential that this important asset of the euro area economy is preserved. the governing council will exercise vigilance so as to continue ensuring the solid anchoring of medium to long - term inflation expectations at levels in line with price stability. such vigilance is indeed warranted, taking into account the present upside risks to the outlook for price developments and the historically low level of both nominal and real short term interest rates. as regards fiscal policy, recent information points to somewhat better than expected outcomes for 2005 in a number of countries and for the euro area as a whole. looking ahead, the targets presented in the latest round of stability programme updates are consistent with a moderate fiscal consolidation, although in some countries imbalances would still persist for a number of years. with the improvements in economic growth, determined fiscal consolidation is now even more important. in particular, countries with excessive deficits must take this opportunity to reduce their fiscal imbalances in a decisive and sustainable manner. this would strongly support the european fiscal framework as established by the stability and growth pact. delaying consolidation would be both inappropriate in the short term and risky in the longer term. adjustment efforts should be based on credible, fully specified measures as part of a comprehensive consolidation programme. moreover, windfall gains from higher than expected growth or other factors should be allocated to speeding up deficit reduction. this would help to prevent a repeat of past experiences, when complacency in good times contributed to persistent budgetary disequilibria. with respect to structural reforms, these remain an essential ingredient for improving competitiveness and growth performance in the euro area. let me also add that, given the services sector ’