This publication presents the findings of the Paris and Prague seminars organized by the World Bank and European Commission to support the efforts of ten Central European countries to integrate smoothly into the European Union. Part 1 includes papers presented at the Paris seminar examining the nature of capital flows to the region: their dynamics, potential sources of vulnerability, potential costs, and how to manage these risks more effectively. Part 2 contains papers presented at the Prague seminar focusing on the vulnerability of the financial sector and methods of preventing financial crisis. It also contains a selection of Central European country experiences in this field. Part 3 is composed of selected papers from both seminars discussing policy implications related to adopting the EU "acquis," the EU accession process, and the Economic and Monetary Union (EMU) and the launch of the euro.