The European Commission’s latest convergence report, which reviews member states’s progress towards euro adoption, has ruled out eurozone membership for the five emerging Europe States which have not yet adopted the single currency.
The report assesses whether member states that have not yet fulfilled the necessary conditions for the adoption of the euro (so-called member states with a derogation) have achieved a high degree of sustainable economic convergence, measured in terms of price stability, sound public finances, exchange rate stability and convergence in long-term interest rates. The report also assesses the compatibility of their national legislation with Economic and Monetary Union (EMU) rules set out in the Treaty on the Functioning of the European Union (TFEU) 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 report concludes that Bulgaria currently fulfils three out of the four economic criteria necessary for adopting the euro: the criteria relating to price stability, public finances and long-term interest rates. Bulgaria does not fulfil the exchange rate criterion and legislation in Bulgaria is not fully compatible with the treaty.
The report concludes that the Czech Republic currently fulfils two out of the four economic criteria necessary for adopting the euro: the criteria relating to public finances and long-term interest rates. The Czech Republic does not fulfil the price stability and exchange rate criteria and legislation in the Czech Republic is not fully compatible with the Treaty.
Croatia currently fulfils three out of the four economic criteria necessary for adopting the euro: the criteria relating to price stability, public finances and long-term interest rates, but does not fulfil the exchange rate criterion. Legislation in Croatia is fully compatible with the treaty. Hungary meantime currently fulfils two out of the four economic criteria necessary for adopting the euro: the criteria relating to public finances and long-term interest rates. Hungary does not fulfil the price stability and exchange rate criteria and legislation in Hungary is not fully compatible with the treaty.
The report concludes that Poland, the region’s largest economy, currently fulfils two out of the four economic criteria necessary for adopting the euro: the criteria relating to price stability and public finances. However, Poland does not fulfil the exchange rate and long-term interest rate criterion and legislation in Poland is not fully compatible with the treaty.
Finally, the report concludes that Romania currently fulfils just one out of the four economic criteria necessary for adopting the euro: the criteria relating to public finances. Romania does not fulfil the price stability, exchange rate and long-term interest rate criteria and legislation in Romania is not fully compatible with the treaty.
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, as was the case with Latvia in 2013.
