that the eu enlargement will contribute positively to economic growth and welfare in the eu as a whole. it will provide new opportunities to trade and investment flows. the enlargement of the internal market will strengthen the degree of competition as the accession of the new member states has increased the number of suppliers within the internal market. in addition, enlargement has enhanced the scope for economies of scale, as the extension of the internal market increased the size of the market available to suppliers. this should translate in lower prices and increased productivity, thereby contributing to a higher potential growth. however, these benefits will not be realised automatically. again, in this respect too, there are substantial benefits associated with the implementation of structural reforms. in particular, a forceful and prompt completion of the enlarged internal market in both the old and the new member states is essential to fully exploit the benefits of the present enlargement. let me say a few words on the erm ii membership which has already been decided for six currencies out of the ten currencies of the new member states. having proceeded with the necessary structural adjustments, participation in erm ii can be an important means of anchoring exchange rate and inflation expectations, and of promoting discipline. it can help orient macroeconomic policies to stability, while at the same time allowing for a degree of flexibility, if needed, through the wide standard fluctuation band and the possibility of adjusting the central parity. in any case, there is not a uniform path to the adoption of the euro and each country will be judged on its own merits before adopting the euro. and, as required by the treaty, the sustainable convergence of the economies concerned will be carefully checked both in the interest of the country concerned and in the interest of the euro area as a whole. fiscal discipline finally, i would like to discuss another major challenge that europe is going to have to face over the next 50 years : an ageing population. a few figures may help to illustrate the magnitude of this challenge : according to the forecasts of eurostat, the european statistics institute, the population of working age ( people aged between 15 and 64 ) is going to drop from 67. 2 % of the overall population in 2004 to 56. 7 % in 2050. at the same time, the proportion of retired people ( in other words, people aged 65 or over ) is going to rise from 16. 4 % of the overall population in 2004 to 29. 9 % in 2050.

the overall assessment of risks to euro area financial stability in the period ahead. ii. the financial market turmoil : overview over the past two months, money, credit and other financial markets appear to be sending mixed signals. the term money market spreads between euro deposit and eonia swap rates have remained high and close to record levels, for maturities from three to twelve months ( as shown in the left chart of slide 3 ). there was a considerable easing of tensions in the money markets at the beginning of this year in the wake of extraordinary measures taken by central banks in the context of year - end concerns last december. but new strains emerged in advance of the first quarter of 2008 and money market spreads in the euro area and elsewhere reached record levels, especially during the bear stearns collapse and rescue. after that, an easing of counterparty credit risk worries has been observed but very large liquidity risk premia have remained in money market interest rates. tensions in the term money market continue to be a global phenomenon. currently, the spreads between three - month deposit and overnight - indexed swaps ( ois ) rates are virtually the same in the euro, us dollar and pound sterling money markets, although pressures have somewhat eased in these latter two markets in recent weeks ( as shown in the right chart of slide 3 ). in the credit markets, greater risk awareness by banks and increased bank funding costs have been reflected in the significant and general further tightening of lending standards in the euro area, the us and the uk. at the same time, credit default swap ( cds ) indices in europe and the us have declined since mid - march ( as shown in the left chart of slide 4 ), corporate bond spreads have narrowed across - the - board, and the availability of bank credit to households and nonfinancial corporations has not been significantly affected by the financial market turbulence. moreover, the functioning of the leveraged loan market is showing some tentative signs of improvement. the narrowing of the cds spreads of financial institutions, which reflects an easing of concerns about counterparty credit risk, and, at the same time, the persisting high levels of term money market spreads may appear to be a puzzle at first sight. one way of reconciling these seemingly mixed messages is to examine the relative contributions of counterparty risk and liquidity risk factors to money market spreads. a decomposition of the one - month euro area term money market spread into counterparty credit risk and other components, mainly liquidity risk, is plotted