Image © Sean Gladwell – Fotolia
(BRUSSELS) – Of the seven countries legally committed to adopting the euro, none currently meets all the conditions for joining the single currency, says the 2016 Convergence Report, published Tuesday.
The report covers criteria referred to as the ‘Maastricht criteria’, which include price stability, sound public finances, exchange rate stability and convergence in long-term interest rates. The compatibility of national legislation with Economic and Monetary Union (EMU) rules is also assessed.
This year’s report on the seven Member States – Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden – outlines progress made with regard to convergence, but no country meets all conditions for euro adoption:
- All seven Member States except Sweden meet the price stability criterion.
- Six Member States fulfil the criterion on public finances, while Croatia is still subject to an excessive deficit procedure.
- No Member State fulfils the exchange rate criterion, as none of them are a member of the Exchange Rate Mechanism (ERM II): at least two years of participation is required before joining the euro area.
- All examined Member States fulfil the long-term interest rate criterion.
- Legislation is not fully compatible with EMU rules in most of the Member States covered, except Croatia.
The Convergence Report provides the basis for EU Council to decide on whether a Member State fulfils the conditions for joining the euro zone. Member States that have not yet fulfilled the necessary conditions for adoption of the euro are referred to in the TFEU as “Member States with a derogation”.
The report assesses whether these Member States have achieved a high degree of sustainable economic convergence, in terms of price stability, sound public finances, exchange rate stability and convergence in long-term interest rates.
It also assesses the compatibility of their national legislation with EMU rules set out in the Treaty related to the independence of national central banks, the prohibition on monetary financing, and compatibility with the statutes of the European System of Central Banks (ESCB) and of the European Central Bank (ECB).
The Commission’s Convergence Report is complemented by a Convergence Report by the ECB. The two reports are prepared independently, but published in parallel.
Convergence Reports are issued every two years, or when there is a specific request from a Member State to assess its readiness to join the euro area, e.g. Latvia in 2013.
Denmark and the UK, which negotiated opt-out arrangements from the final stage of EMU in the Maastricht Treaty, are therefore not covered by the report.
Further information
The 2016 Convergence Report: Assessment of Member States regarding the conditions for euro adoption MEMO
