as motivation for further structural reforms. these reforms are needed in accession countries in order to further transform their economies into fully - fledged market economies, so as to enable them to cope with competitive pressures and provide the conditions for sustainable and non - inflationary growth. given the positive impact of structural reforms on those countries'disinflation processes, there appears to be no contradiction between real and nominal convergence. thus, both objectives should be pursued in parallel and the emphasis should not be focused on one target at the expense of the other. in the context of real and nominal convergence, i should like to emphasise the important role played by sound fiscal policies. although we judge the overall fiscal policy stance as being broadly satisfactory in most accession countries, budgetary consolidation efforts in some countries appear to have experienced a recent setback. in these few cases, a strengthening of efforts to return to the path of sound fiscal policies is crucial. a determined pursuit of fiscal consolidation is all the more necessary as the accession process and the completion of the transition phase are likely to place further demands on the budgetary situation, for example in relation to higher infrastructure investments or future reforms of the accession countries'health and social security systems. ladies and gentlemen, i should like to conclude my presentation by answering one of the main questions which usually arises when a representative of the ecb talks about enlargement : will the accession process have consequences for the conduct of the single monetary policy? the answer is no. as i have already argued with regard to the issue of monetary policy and regional differences, the ecb's monetary policy can focus only on maintaining price stability in the euro area as a whole, irrespective of the number of regions or countries forming part of the euro area. furthermore, the definition of price stability, as adopted by the ecb, should be seen as a lasting quantification of its primary objective. the purpose of a definition is that it should remain valid as a consistent and credible point of reference over time and in different circumstances. ladies and gentlemen, it has been a pleasure to be able to use this brief presentation to convey the perspective of a central bank on topics that are also of great interest to the committee of the regions. thank you very much for your attention.

lower the adjustment costs associated with asymmetric shocks affecting one particular country or region. although considerable progress has been made, much remains to be done. ladies and gentlemen, allow me to also stress the importance of your role in contributing to informing european citizens about the dangers caused by divergences in price developments across countries or regions, which might arise as a result of excessive wage increases or the unsustainable expansion of profit margins at the local level. the more such developments become entrenched in the economy, the more they will lead to a loss in competitiveness and, eventually, to a loss in output and employment in the respective economies. clearly, our efforts to make the euro a success will require all of us to master – at home – the challenges which i have outlined. however, the european union, and also the euro area, face an important external challenge – and this brings me to the second topic of my presentation : the eu accession process and the subsequent enlargement of the euro area. the fact that your committee has established a liaison group with applicant countries bears witness to the substantial implications which enlargement will have not only for a central bank but also for representatives of regional and local authorities. as you are well aware, to date 12 countries from central, eastern and southern europe are involved in negotiations to become members of the eu and, ultimately, also of the euro area. the integration of such a large number of new countries into the european union – which would imply almost a doubling of the current number of member states – will be an enormous task for both sides and be without a precedent in history. as i have just said, accession to the eu also entails significant implications for the economies of the accession countries themselves. for them, the main priority is indeed to foster the convergence process with the eu, both in real and in nominal terms. thus, accession countries are aiming to achieve the european union's standard of living, while at the same time seeking macroeconomic and financial stability. this process will entail profound and comprehensive adjustments in their real economies as well as in the careful design of sound economic policies. undoubtedly, significant progress has already been made in this respect. a substantial reallocation of resources, a strong reorientation of trade links towards the eu, a complete institutional overhaul and a sizeable development of the private sector are the most obvious signs of systemic change. however, these achievements should not give rise to complacency but rather be taken