Convergence criteria

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Remaining currencies on track to be migrated  v • d • e 
Currency Abbr. Rate Conv goal
Flag of Slovakia Slovak koruna SKK 30.1260[1] 2009-01-01
Flag of Lithuania Lithuanian litas LTL 3.45280 2010-01-01
Flag of Estonia Estonian kroon EEK 15.6466 2011-01-01
Flag of Bulgaria Bulgarian lev BGN 1.95583[2] 2012-01-01
Flag of Poland Polish złoty PLN — 2012-01-01
Flag of Latvia Latvian lats LVL 0.702804 2012-01-01
Flag of the Czech Republic Czech koruna CZK — 2012-01-01
Flag of Hungary Hungarian forint HUF — 2012-01-01
Flag of Romania Romanian leu RON — 2014-01-01
Flag of Sweden Swedish krona SEK — —
This is an article about European politics, Convergence criteria is also a mathematical term regarding series.

Convergence criteria (also known as the Maastricht criteria) are the criteria for European Union member states to enter the third stage of European Economic and Monetary Union (EMU) and adopt the euro. The four main criteria are based on Article 121(1) of the European Community Treaty. Those member countries who are to adopt the euro need to meet certain criteria.

Contents

[edit] Criteria

1. Inflation rate: No more than 1.5 percentage points higher than the three lowest inflation member states of the EU.

2. Government finance:

Annual government deficit:
The ratio of the annual government deficit to gross domestic product (GDP) must not exceed 3% at the end of the preceding fiscal year. If not, it is at least required to reach a level close to 3%. Only exceptional and temporary excesses would be granted for exceptional cases.
Government debt:
The ratio of gross government debt to GDP must not exceed 60% at the end of the preceding fiscal year. Even if the target cannot be achieved due to the specific conditions, the ratio must have sufficiently diminished and must be approaching the reference value at a satisfactory pace.

3. Exchange rate: Applicant countries should have joined the exchange-rate mechanism (ERM II) under the European Monetary System (EMS) for 2 consecutive years and should not have devaluated its currency during the period.

4. Long-term interest rates: The nominal long-term interest rate must not be more than two percentage points higher than in the three lowest inflation member states.

The purpose of setting the criteria is to maintain the price stability within the Eurozone even with the inclusion of new member states.

[edit] Fulfilment of criteria

Convergence criteria Obligation to adopt 4 Target date Euro coins design
Country 1 Inflation rate ² Government finances ERM II membership Interest rate ³ set by the country recommended by the Commission
annual government deficit to GDP gross government debt to GDP
Reference value 5 max 3.2% max. 3% max. 60% min. 2 years max 6.5% NA NA NA NA
Flag of Bulgaria Bulgaria 9.4% -3.4% 6 18% 0 years 4.7% yes 2010-2011 NA in progress
Flag of the Czech Republic Czech Republic 4.4% 1.6% 28.7% 0 years 4.5% yes unset 8 NA in progress
Flag of Denmark Denmark 2.1% -3.9% 6 30.0% joined ERM II on 1 January 1999 5.2% opt-out not yet set NA not yet
Flag of Estonia Estonia 8.3% -2.8% 6 3.4% joined ERM II on 28 June 2004 (4.1%) yes 2011 To be announced ready
Flag of Hungary Hungary 7.5% 5.5% 66% 0 years 6.9% yes 2012-2014 NA in progress
Flag of Latvia Latvia 12.3% 0% 9.7% joined ERM II on 2 May 2005 5.4% yes 2012 To be announced ready
Flag of Lithuania Lithuania 7.4% 1.2% 17.3% joined ERM II on 28 June 2004 4.6% yes 2010 To be announced ready
Flag of Poland Poland 3.2% 2.0% 45.2% 0 years 5.7% yes 2012 NA in progress
Flag of Romania Romania 5.9% 2.5% 13% 0 years 7.1% yes 2014 NA none yet
Flag of Slovakia Slovakia 2.2% 2.2% 29.4% joined ERM II on 28 November 2005 4.5% yes 2009 accepted ready
Flag of Sweden Sweden 2.0% -3.5% 6 40.6% 0 years 4.2% yes not yet set NA none yet
Flag of the United Kingdom United Kingdom 2.1% 2.5% 42.6% 0 years 9 5.25% opt-out NA NA none yet
Croatia 2.7% 2.2% 40.8% 0 years NA NA NA NA
Republic of Macedonia 3.2% 0.6% 39.5% 0 years NA NA NA NA
Turkey 9.5% 0.6% 60.7% 0 years 10% NA NA NA NA
Albania 2.4% 0 years NA NA NA NA
Bosnia and Herzegovina 0.9% 0 years NA NA NA NA
Serbia 0 years NA NA NA NA
Montenegro 10 0 years 10 NA NA NA NA
Kosovo 10 0 years 10 NA NA NA NA

1 Current EU member states that have not yet adopted the Euro, candidates and official potential candidates.
² No more than 1.5% higher than the 3 best-performing EU member states.
³ No more than 2% higher than the 3 best-performing EU member states.
4 Formal obligation for Euro adoption in the country EU Treaty of Accession or the Framework for membership negotiations.
5 Values from May 2007 report [1]. To be updated each year.
6 Negative deficit value means surplus.
7 Inflation reference value of the March 2006 report was 2.6%, thus the non-entrance of Lithuania to the Eurozone on 1.1.2007 despite that it covers the criteria currently.
8The Czech Republic worked with an official target date of 2010 until 2006, when both the central bank and the government officially dropped this target rate as unachievable. Some vague discussions about 2015 currently in progress, though no official target date is currently set.
9United Kingdom participated in the ERM-I from October 1990 to September 1992.
10Kosovo and Montenegro use the euro as their currency, but they are de jure not part of the Eurozone and aren't allowed mint any coins or print any notes. Kosovo and Montenegro don't have any national currency, so it is currently uncertain what a Kosovan and Montenegrin ERM II membership would mean.
     criteria fulfilled

[edit] References

  1. ^ The central rate of the Slovak koruna was originally 38.4550. The first revaluation on 17 March 2007 set the central rate to 35.4424. A second revaluation happened on 28 May 2008, lowering the rate once more to 30.1260. See Slovak koruna for details.
  2. ^ Bulgaria is not officially part of ERM II as of 7 January 2007. But as the Bulgarian lev exchange rate is fixed to the rate of German mark (and thus to the euro) country is included in the list.

[edit] See also

[edit] External links