Convergence between euro zone and candidate countries not a certainty

On Monday a senior central banker warned that financial market convergence between the euro zone and East European EU candidate countries was not a one-way bet, even after Ireland's' positive referendeum vote on the Nice Treaty. Monetary Policy Council member, Boguslaw Grabowski, said that nominal convergence of a key Polish derivative - the five year bond yield in five years time, could take place within months, which would leave the market vulnerable. He added that if the government failed to follow through on its budget tightening plans, this would delay euro entry from the target date of 2006 or 2007 and could cause investors to pull out of the country. "If nominal convergence happens in the first half of 2003 and fiscal policy (reform) begins to drag its feet, then we may have problems," Grabowski told an economic seminar. (Reuters) J.K.