• A
• B
• C
• D
• E
• F
• G
• H
• I
• J
• K
• L
• M
• N
• O
• P
• Q
• R
• S
• T
• U
• V
• W
• X
• Y
• Z

Convergence criteria

(Photo: EU Commission)

Convergence entails that countries move closer to one another. To join the single currency (the Euro), EU member states are obliged to meet four criteria, fixed in a Protocol (on the excessive deficit procedure) and in Art 121 TEC:

- Price stability: The inflation rate must not exceed the inflation rate of the three top-performing member states by more than 1.5%. The European Central Bank has established that the annual inflation in all EU member states must be less than 2%.

- Government finances: The annual budget deficit must be below 3% of GDP and overall public debt below 60% of GDP.

- Exchange rates: For two years the currency must be in a fixed relation with the Euro without a devaluation.

- Long-term interest rates: May not exceed the average interest rate of the three best performing member states by more than 2%. The public debt criterion can be accepted at a higher debt level if the direction of its  movement is satisfactory.

Once a country has joined the third stage of the Economic and Monetary Union, it is bound by the Stability and Growth Pact.  

Links

http://europa.eu/scadplus/leg/en/lvb/l25014.htm

Share |