cross - border financial flows between mature economies almost tripling over the last quarter of a century. in parallel, financial innovation has developed faster than the regulatory framework. what lessons to draw? this conference should provide the forum with an enlightening discussion on the issue, and with an opportunity to share your views and experience, as academics, central bankers, economists and representatives of eu institutions constitute the audience. having set the scene for i trust a stimulating discussion on such a complex topic, i am very honoured to have with us three eminent authorities on globalisation issues. let me say just a few words about our distinguished guest speakers. first is professor ken rogoff. he is a professor of economics at harvard university. as you know, he has previously been chief economist and director of research of the international monetary fund ( imf ) from 2001 to 2003 and beforehand he has served as an economist at the imf and also at the board of governors of the federal reserve system. professor rogoff has published extensively on policy issues in international finance, including both exchange rates and international monetary policy. let me also welcome lucas papademos, the vice - president of the ecb since 2002. previously, he was governor of the bank of greece from 1994 to 2002 and he served as a senior economist at the federal reserve bank of boston in 1980. lucas papademos has also been a professor of economics at the university of athens since 1988, and he is author of numerous articles and essays on both economic and monetary policies. let me also mention that among other competences, he is in charge of financial stability issues within the executive board of the ecb. our third speaker is lars heikensten. he has been a member of the european court of auditors since november 2005. he previously was governor of the sveriges riksbank from 2003 to 2005, and prior to that deputy governor since 1995. he had been chief economist at svenska handelsbanken between 1992 and 1995, and had served as under - secretary for economic affairs at the swedish ministry of finance between 1990 and 1992. mr heikensten, wrote academic papers and books, and conducted research in the area of industrial policy, labour market and foreign aid. again, i would like to thank the three of you, for coming to discuss globalisation. let me now proceed with the conference organisation. professor rogoff will be our first speaker, followed by lucas papademos and then lars heikensten

i must say at a rather slow pace. indeed, accession countries still show important gaps in terms of income levels versus the eu. so at the end of 2001, that are the latest figures i have come across, income levels in accession countries were 44 % of the eu average in terms of ppp. with a growth rate scenario of 4 % per year, all accession countries would reach by the year 2026 the same income level of greece when it joined the eu in 1981, namely 62. 4 %. if i look at the level greece had reached when it joined the euro zone twenty years later, then it would take the accession countries about to year 2033 before they would be at the level of the country with most catch - up need that has so far joined the euro zone. therefore the right policies, concentrating on liberalisation and macroeconomic stabilisation, have to be implemented and pursued in order to foster growth and enhance the catching - up process. 2. currency regimes • first principle : there are no " one fits all " exchange rate strategies in the wake of accession. different regimes are possible as long as they are supported by a stability - oriented policy stance ; • second principle : an exchange rate regime should be assessed on its ability to contribute to a stable macroeconomic environment by supporting an exchange rate level consistent with underlying fundamentals and expectations ; • third principle : for non - key currencies, corner solutions are not necessarily the best solution. intermediate options may be a relevant alternative, especially for small open economies with a dominant trading partner that maintains price stability as it is the case for most accession countries. in addition, i would like to make one personal remark on currency boards arrangements, which has become fashionable at one point in the time : • • euro - based cbas are not a substitution for participation in the european exchange rate mechanism, erm ii. like all countries having entered emu, the erm ii passage is compulsory and i would give three reasons : 1. to be able to assess on the basis of equal treatment whether the fulfilment of the exchange rate criterion is satisfied, it has to be done in an equivalent multilateral environment, namely erm ii ; 2. in full respect of the principle of equal treatment we cannot assess exchange rate stability inside erm ii for past accessions and outside erm ii for new accessions ; 3. i think the erm ii and the assessment of the exchange rate stability criteria is also part of the second