this are mainly twofold. first, sound financial sectors are key to delivering “ stable money ”. weak financial systems tend to blur the monetary transmission mechanism and the capacity of monetary policy to influence inflation and growth outcomes, putting the maintenance of price stability and the credibility of the central bank at risk. second, financial sector reform is needed because it ensures that structural reforms, particularly in the goods and labour markets, become fully effective. indeed, despite recent structural reforms and positive growth, the catching - up of per capita income with the euro area has remained limited, and in many countries output growth remains below potential. efficiently functioning financial markets are an important precondition for an efficient allocation of capital, thereby contributing to an economy's growth potential. in many ways, the prospect of eu accession has been instrumental in triggering reform in accession countries, and structural reforms have advanced far enough in these economies to achieve macroeconomic stability. however, there is much that remains to be done. i am confident that the policy - makers in the region will “ hear and listen ” and remain committed to continuing along the path of reform on which they have already embarked. ladies and gentlemen, i believe that, with respect to the enlargement of the eu and, later on, the accession of these countries to the euro area, the next few years will be crucial. i will take part in at least most of this process as an observer and no longer as an actor. however, i will continue to watch with great interest how the european union and, in particular, the european system of central banks ( escb ) continues to manage this momentous process. i should like to conclude by again thanking imadec university for the honour it has bestowed upon me. i regard this honorary doctorate as a reward not only for myself, but also for all those - and klaus liebscher is one of them - who have contributed to a stability - oriented macroeconomic framework. thank you for your attention.

countries. at the beginning of the transition to a market economy, poor tax collection and governments'limited access to financial markets led to substantial monetisation of public deficits. however, from the mid - 1990s onwards, fiscal policy has focused on macroeconomic stability. therefore, a key lesson from the accession countries'experience is that responsible fiscal policy has been a crucial element in achieving and maintaining macroeconomic stability. looking ahead, the best contribution that fiscal policies can make to sustainable noninflationary growth is by pressing ahead with fiscal consolidation, as is necessary to ensure the flexibility needed to deal with potential domestic and / or external economic shocks in the medium term. regrettably, fiscal developments have worsened recently in a few accession countries, reflecting ongoing restructuring programmes and higher expenditures related to the adoption of eu standards, but also the lack of a realistic medium - term fiscal strategy. in addition, structural deficits have become rather large and public debt ratios have started to increase, limiting the room for manoeuvre of automatic stabilisers. overall, the need for further fiscal consolidation seems overwhelming, as fiscal slippages could put under pressure and even endanger the macroeconomic stabilisation achieved thus far. finally, let me turn briefly to the third component of, or perhaps better complement to, stability - oriented policies in accession countries that i will be addressing today : the implementation of further structural reforms. stability - oriented policies can best be supported by structural reforms, as they enhance the flexibility of the economy to adjust to necessary changes and cope with potential shocks. moreover, structural reforms are also key determinants of the medium - term growth potential. in the case of the accession countries, structural reforms are even more important because they are necessary to complete the full adjustment of the accession countries'economies toward well - functioning market economies, including the setting - up of appropriate institutions and the adoption of international best practices in a number of areas. completing this agenda is a challenge for the accession countries, particularly because of the sheer magnitude of pending reforms. moreover, structural changes may complicate the conduct of monetary policy, as structural reforms may cause structural breaks that complicate the pursuit of credible disinflationary policies. also, the calendar for further price liberalisation, which has an impact on inflationary developments, is often set by each government and is thus difficult for a central bank to predict. from an ecb perspective, financial sector reform is also of the utmost importance. the reasons for