Euro convergence criteria

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EU members which have not adopted the euro
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 2022) 		Notes
Bulgaria Bulgaria Lev
(BGN) 		1.95583[4] 2007-01-01 2020-07-10 Euro by 1 January 2025[5][6] Not compliant on inflation and legislation
(Reassessment due in June 2024)[7][2]
Czech Republic Czech Rep. Koruna
(CZK) 		Free floating 2004-05-01 None Assessment of joining ERM-II to be completed by October 2024[8] Not compliant on 3 out of 5 criteria
Denmark Denmark Krone
(DKK) 		7.46038 1973-01-01 1999-01-01 Not on government's agenda[9][10] Not assessed due to treaty opt-out from eurozone membership Rejected euro adoption by referendum in 2000
Hungary Hungary Forint
(HUF) 		Free floating 2004-05-01 None Not on government's agenda[11] Not compliant on 4 out of 5 criteria
Poland Poland Złoty
(PLN) 		Free floating 2004-05-01 None Not on government's agenda[12] Not compliant on 4 out of 5 criteria
Romania Romania Leu
(RON) 		Free floating 2007-01-01 None ERM-II by 2026 and euro by 1 January 2029[13][14][15] Not compliant on 5 out of 5 criteria
Sweden Sweden Krona
(SEK) 		Free floating 1995-01-01 None Not on government's agenda[16] Not compliant on ERM-II and legislation Rejected euro adoption by referendum in 2003. Still obliged to adopt the euro once compliant with all criteria.[17]
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.

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.

  criteria fulfilled

References

  1. ^ a b "Foreign exchange operations". European Central Bank. Retrieved 12 July 2020.
  2. ^ a b "Convergence Report". European Central Bank. Retrieved 2 March 2024.
  3. ^ "EUROPEAN ECONOMY 4/2014: Convergence Report 2014" (PDF). European Commission. 4 June 2014.
  4. ^ 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]
  5. ^ "Bulgaria views Eurozone entry by 2025 as realistic". Euractiv. 18 October 2023. Retrieved 6 February 2024.
  6. ^ "Денков: Целта на България е влизане в еврозоната на 1 януари 2025 година" ["Denkov: Bulgaria's goal is to enter the Eurozone on 1 January 2025"]. manager.bg (in Bulgarian). 20 January 2024. Retrieved 24 January 2024.
  7. ^ "PM Denkov Confirms: Bulgaria Aims to Join Eurozone on January 1, 2025". Novinite. 19 January 2024. Retrieved 15 March 2024.
  8. ^ "Czech Government to Evaluate Merits of Joining 'Euro Waiting Room'". Reuters. 7 February 2024. Retrieved 7 February 2024.
  9. ^ "Denmark's Zeitenwende". European Council on Foreign Relations. 7 June 2022. Retrieved 25 February 2024.
  10. ^ "Regeringsgrundlag December 2022: Ansvar for Danmark (Government manifest December 2022: Responsibility for Denmark)" (PDF) (in Danish). Danish Ministry of Finance. 14 December 2022.
  11. ^ "Orbán: Hungary will not adopt the euro for many decades to come". Hungarian Free Press. 3 June 2015.
  12. ^ "Złoty czy euro? Polacy stawiają sprawę jasno [SONDAŻ]" [Zloty or euro? Poles make things clear (SURVEY)]. Business Insider (in Polish). Polish Press Agency. 10 January 2023. Retrieved 9 April 2023.
  13. ^ Smarandache, Maria (20 March 2023). "Romania wants to push euro adoption by 2026". Euractiv.com. Retrieved 27 February 2024.
  14. ^ Smarandache, Maria (24 March 2023). "Iohannis: No 'realistic' deadline for Romania to join eurozone". Euractiv.com. Retrieved 29 February 2024.
  15. ^ 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.
  16. ^ "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.
  17. ^ 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

External links

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