We do appreciate that the System is still in a developmental phase and has yet to reach its ideal configuration. The arrival of ten new members, moreover, will not make things any easier for a time. I would nevertheless like to suggest that a collective effort be undertaken to rationalise the work of the ESCB, not least by containing the number of meetings in Frankfurt and elsewhere. The challenges posed by EMU are clearly diverse and vary from country to country as well as across time, depending on a host of factors ranging from the extent of catching-up that needs to be done and the tools available to policymakers, to the degree of cross-sectoral linkages and of consensus on the respective national strategies. In practice, however, the underlying economic causes are probably quite similar across countries, often being manifestations of macroeconomic imbalances and structural inefficiencies. As such they must be addressed sooner rather than later. Only in this way will it be possible for our countries to derive full benefit from EU membership. That probably hardly needs emphasizing in this forum because central bankers understand the importance of coherent policies designed to achieve a more efficient allocation and use of resources. At the same time, however, we are also conscious of the difficulties involved in reconciling what is conceptually desirable with what is feasible in practice.
In this regard it is reassuring that the recently concluded IMF/World Bank FSAP exercise found Malta’s financial system to be healthy and well supervised, with a comprehensive legal framework and strong adherence to most international standards and codes. An issue of special significance for central bankers is the need to preserve the integrity of their institutions. Although the experience of current euro area Member States already provides useful insights into the appropriate exchange rate strategies to be pursued prior to, and during ERM II, the acceding countries will have to arrive at this judgment on the basis of expectations of the future path of the economy. Expectations, however, are just that. This means having to stand ready to give satisfactory accounts of the rationale for the policy choices made, to explain deviations from targets and to ensure that governments introduce corrective measures without undue delay. Unfortunately, however, the information reaching economic operators, and financial markets in particular, is not always accurate. And yet, with only a few months to go to EU accession, the markets will be looking out for indications regarding the strategies we intend to pursue with respect to ERM II and entry in the euro area. It will be important, therefore, to be constantly on guard against any imprecise information which could provoke untoward market reactions. This highlights the importance of an effective communications strategy and of appropriate coordination between central banks and governments. In Malta the joint working committee established to elaborate the strategy for adopting the euro fulfils this role.