exhaustive ) in estonia. estonia would like to be one of the first new members of the club - we would like to become a member of the euro area at the earliest possible moment. that would mean joining the erm2 as soon as possible, with the present eur / eek exchange rate and the currency board arrangement in place. provided nothing adverse happens, estonia might be in a position to submit its application for erm2 membership as early as mid - 2004. it should, perhaps, also be mentioned that at the present moment, estonia is in a relatively advantageous position among the candidate countries as to its ability to meet the maastricht criteria and other important requirements. comparing the level on nominal convergence among the present accession countries to the respective levels in some of the former accession countries five years prior to their emu accession, it is evident that there should be no serious concerns as to most of the present accession countries'ability to fulfil the nominal criteria over the mid - term but estonia's choice of a currency board based monetary regime holds some inherent advantages in this respect. fiscal balance is a very important prerequisite for a smoothly operating and effective currency board arrangement, and that has had a strong impact on estonian fiscal policies. the main goal of estonian fiscal policy is balancing the budget over the cycle and absorbing the possible fluctuations in the private sector savings rate. we believe that a balanced fiscal stance together with strong financial system is also the most efficient way to avoid short - term speculative capital inflows within the context of eu accession. at this point, we expect no great difficulties in meeting the sovereign debt and budget deficit criteria. in that sense - estonia, most likely, would be technically ready for joining the euro area even as early as 2006. the biggest challenge for the public sector, in that context, would be to avoid a lax macroeconomic policy mix that would over - stimulate domestic demand and result in significant real appreciation. and of course - there is really a huge amount of technical preparations that must be completed before joining the euro area. we have drawn our plans and the work has been going on for some time. in some cases we can take advantage of our still - remembered experience of the 1992 monetary reform. in other cases, like some settlement - systems - related issues, we must wait for european institutions to make up their minds about the details. there is no doubt, however that technical preparation would not slow us down. iv. in conclusion speaking about

. sweden and finland, our close neighbours, can expect a recession of up to 4. 7 %. as we know, the global financial crisis and the collapse of markets caused serious difficulties to several new member states. it is clear the events that took place at the end of the last and at the beginning of this year were real challenges for the estonian monetary and financial system, testing their resilience and ability to adjust to the changing external environment. today i dare to look at the situation with moderate optimism and repeat what has already been said in march : estonia has all the possibilities of successfully passing through the crisis. estonia's monetary policy and financial stability in 2008 turning to the tasks of eesti pank, i would like to start with an overview of the functioning of the monetary policy framework. the objective of eesti pank, member of the european system of central banks, is to ensure price stability in estonia. to this end, we rest on the currency peg to the euro, the currency board arrangement and the eu exchange rate mechanism erm ii. the success of this system is confirmed by the slowdown in the price rise which started in 2008, and the halt in the growth rate of consumer prices in recent months. looking ahead, eesti pank forecasts the price level to decline somewhat in both this and next year. it is clear the estonian monetary policy or the monetary policy framework will not and must not be changed. the exchange rate of the estonian kroon will remain as it is and we will accede to the euro area at the current exchange rate. i would also like to stress that price stability is one of the most important factors supporting economic growth. the second main objective of eesti pank is to support the stability of the financial system, especially the credibility of the banking system. similarly to choices made in monetary policy, eesti pank has over the years proceeded from clear and comprehensible principles also in banking. we have firmly supported the common banking market of the eu and the nordicbaltic region. in addition, we have emphasised the relevance of the capitalisation and liquidity of the banks operating here. eesti pank kept the obligatory minimum capital adequacy ratio at the level of 10 % and increased the reserve requirement to 15 % of the total liabilities of a bank. against this background i dare to say that so far the banking sector has coped well with the crisis. the average capital adequacy ratio