Euro convergence criteria
Non-eurozone member state | Currency (Code) |
Central rate per €1[1] | EU join date | ERM II join date[1] | Government policy on euro adoption | Convergence criteria compliance[2] (as of June 2024) |
Notes |
---|---|---|---|---|---|---|---|
Bulgaria | Lev (BGN) |
1.95583[4] | 2007-01-01 | 2020-07-10 | Euro adoption on 1 July 2025[5] | Compliant with 4 out of 5 criteria (all except inflation)[6] | The Bulgarian government expects to be in compliance with all criteria by the end of 2024[6] |
Czech Rep. | Koruna (CZK) |
Free floating | 2004-05-01 | None | Assessment of joining ERM-II to be completed by October 2024[7] | Compliant with 2 out of 5 criteria | |
Denmark | Krone (DKK) |
7.46038 | 1973-01-01 | 1999-01-01 | Not on government's agenda[8][9] | Not assessed due to opt-out from eurozone membership | Rejected euro adoption by referendum in 2000 |
Hungary | Forint (HUF) |
Free floating | 2004-05-01 | None | Not on government's agenda[10] | Not compliant with any of the 5 criteria | |
Poland | Złoty (PLN) |
Free floating | 2004-05-01 | None | Not on government's agenda[11] | Not compliant with any of the 5 criteria | |
Romania | Leu (RON) |
Free floating | 2007-01-01 | None | ERM-II by 2026 and euro by 1 January 2029[12][13][14] | Not compliant with any of the 5 criteria | |
Sweden | Krona (SEK) |
Free floating | 1995-01-01 | None | Not on government's agenda[15] | Compliant with 2 out of 5 criteria | Rejected euro adoption by referendum in 2003. Still obliged to adopt the euro once compliant with all criteria.[16] |
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.
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.
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 |
Bulgaria | 9.4% | -3.4% 6 | 18% | 0 years | 4.7% | yes | 2010-2011 | NA | in progress |
Czech Republic | 4.4% | 1.6% | 28.7% | 0 years | 4.5% | yes | unset 8 | NA | in progress |
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 |
Estonia | 8.3% | -2.8% 6 | 3.4% | joined ERM II on 28 June 2004 | 4.1% | yes | 2011 | To be announced | ready |
Hungary | 7.5% | 5.5% | 66% | 0 years | 6.9% | yes | 2012-2014 | NA | in progress |
Latvia | 12.3% | 0% | 9.7% | joined ERM II on 2 May 2005 | 5.4% | yes | 2012 | To be announced | ready |
Lithuania | 7.4% | 1.2% | 17.3% | joined ERM II on 28 June 2004 | 4.6% | yes | 2010 | To be announced | ready |
Poland | 3.2% | 2.0% | 45.2% | 0 years | 5.7% | yes | 2011 | NA | in progress |
Romania | 5.9% | 2.5% | 13% | 0 years | 7.1% | yes | 2014 | NA | none yet |
Slovakia | 2.2% | 2.2% | 29.4% | joined ERM II on 28 November 2005 | 4.5% | yes | 2009 | accepted | ready |
Sweden | 2.0% | -3.5% 6 | 40.6% | 0 years | 4.2% | yes | not yet set | NA | none yet |
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.
References
- ^ a b "Foreign exchange operations". European Central Bank. Retrieved 12 July 2020.
- ^ "Convergence Report June 2024" (PDF). European Central Bank. 2024-06-26. Retrieved 2024-06-27.
- ^ "EUROPEAN ECONOMY 4/2014: Convergence Report 2014" (PDF). European Commission. 4 June 2014.
- ^ The Bulgarian National Bank pursues its primary objective of price stability through an exchange rate anchor in the context of a Currency Board Arrangement (CBA), obliging them to exchange monetary liabilities and euro at the official exchange rate 1.95583 BGN/EUR without any limit. The CBA was introduced on 1 July 1997 as a 1:1 peg against German mark, and the peg subsequently changed to euro on 1 January 1999.[3]
- ^ "The National Assembly adopted at first reading a bill for the introduction of the euro in the Republic of Bulgaria". Parliament.bg. National Assembly of Bulgaria. 26 July 2024. Retrieved 7 August 2024.
- ^ a b "България покрива всички критерии, остава само инфлацията за членство в еврозоната, според редовните конвергентни доклади за 2024 г. на Европейската комисия и на Европейската централна банка" [Bulgaria meets all criteria, only inflation remains for eurozone membership, according to the regular convergence reports for 2024 of the European Commission and the European Central Bank]. Evroto.bg (in Bulgarian). Ministry of Finance (Bulgaria). 26 June 2024.
- ^ "Czech Government to Evaluate Merits of Joining 'Euro Waiting Room'". Reuters. 7 February 2024. Retrieved 7 February 2024.
- ^ "Denmark's Zeitenwende". European Council on Foreign Relations. 7 June 2022. Retrieved 25 February 2024.
- ^ "Regeringsgrundlag December 2022: Ansvar for Danmark (Government manifest December 2022: Responsibility for Denmark)" (PDF) (in Danish). Danish Ministry of Finance. 14 December 2022.
- ^ "Orbán: Hungary will not adopt the euro for many decades to come". Hungarian Free Press. 3 June 2015.
- ^ "Poland is still not ready to adopt the euro, its finance minister says". Ekathimerini.com. 30 April 2024.
- ^ Smarandache, Maria (20 March 2023). "Romania wants to push euro adoption by 2026". Euractiv.com. Retrieved 27 February 2024.
- ^ Smarandache, Maria (24 March 2023). "Iohannis: No 'realistic' deadline for Romania to join eurozone". Euractiv.com. Retrieved 29 February 2024.
- ^ Balázs Márton (20 March 2023). "Románia előrébb hozná az euró bevezetését" [Romania would advance the introduction of the euro]. Telex.hu (in Hungarian). Retrieved 29 February 2024.
- ^ "DN Debatt Repliker. 'Folkligt stöd saknas för att byta ut kronan mot euron'" [DN Debate Replicas. "There is no popular support for exchanging the krona for the euro"]. Dagens Nyheter (in Swedish). 3 January 2022. Retrieved 6 May 2022.
- ^ Sweden, while obliged to adopt the euro under its Treaty of Accession, has chosen to deliberately fail to meet the convergence criteria for euro adoption by not joining ERM II without prior approval by a referendum.
See also
- Euro adoption by the new members states
- Economy of the European Union#Economies of member states
- Stability and Growth Pact