this brings me to the end of my presentation. central banks are at the core of financial systems and therefore closely follow developments which can foster integration [ see slide 25 ]. the ecb and the entire eurosystem devote a substantial amount of resources to this task, because we are convinced that progress in this area is important for the european economy, within the framework established by the lisbon agenda. finally, i should also like to stress that, while financial integration is an important driver for increasing the efficiency of a financial system, financial efficiency also depends on financial development. therefore, future reports are envisaged to encompass analysis and assessment of the various factors determining the efficient functioning of the financial system. the special feature on financial development that i presented is a first step in this direction. thank you very much for your attention. i am now at your disposal for questions.

##b to react to a local shock. second, after joining the monetary union, the polish currency will be replaced with the euro, so the zloty / euro exchange rate adjustments will no longer be available. accordingly, the only policy tool left after euro area accession is fiscal policy. for this reason it is of crucial importance to run a balanced budget in the medium run, so that in case of negative shocks, there is room for increasing the deficit, and thus buffer the shock. additionally, there are also economic forces which can bring the economy back to equilibrium. the most prominent is wage adjustment – after a negative shock, falling wages can help reduce the cost of production and – as a consequence – prices. this will increase demand and help the economy return to equilibrium. a crucial prerequisite for this channel to operate smoothly is a flexible labor market – only if wages adjust immediately, can an increasing unemployment and an economic slowdown be avoided. we know, however, that this downward wage flexibility is rarely seen in real life. regarding asymmetric shocks, one thing seems certain. we are not able to foresee if serious asymmetric shocks are going to affect the polish economy after joining the euro or not. we can only speak in terms of probabilities and, given the data, it seems that the probability of huge shocks occurrence seems limited. the polish economy is strongly integrated with the eurozone, with a majority of exports going to the common currency area. moreover, most studies ( e. g. fidrmuc, korhonen 2003, eickmeier, breitung 2005 ) show a relatively high correlation of business cycles between poland and the eurozone. this substantially reduces, though does not eliminate, the risk of asymmetric shocks. looking ahead, one can see potential risk factors. one of them is production clustering. if the recently observed trend for country specialization ( e. g. slovakia specializes in producing cars, india in business process outsourcing ) holds on, it may increase the risk of asymmetric shocks in the future ( de grauwe 2003 ). another example of a possibly distant future asymmetric “ shock ” is global warming. a recent report cited by financial times ( ft, 6 january 2007 ) shows that the northern members of the eurozone are likely to profit and the southern members to suffer from the climate change. nevertheless, whatever the likelihood of shocks, it remains of crucial importance to maintain a balanced fiscal perspective