Brussels, 5-3-2013 — /europawire.eu/ — Today, Latvia formally asked the Commission to deliver an extraordinary convergence report with the aim of joining the euro from 1st January 2014. The report will assess if the country has achieved the five convergence criteria as defined in the Maastricht Treaty for joining the euro. The criteria include a qualitative assessment of the structural sustainability of public finances in Latvia.
If Latvia adopts the euro next year:
The procedure
Background
The convergence criteria are set out in Art. 140 (1) of the EU Treaty.
The Maastricht convergence criteria:
WHAT IS MEASURED | HOW IT IS MEASURED | CONVERGENCE CRITERIA |
Price stability | Harmonised consumer price inflation rate | Not more than 1.5 percentage points above the rate of the three best performing EU countries |
Sound public finances | Government deficit as % of GDP | Reference value: not more than 3% |
Sustainable public finances | Government debt as % of GDP | Reference value: Not more than 60% |
Durability of convergence | Long-term interest rate | Not more than 2 percentage points above the rate of the three best performing EU countries in terms of price stability |
Exchange rate stability | Deviation from a central rate | Participation in ERM for 2 years without severe tensions |
At least once every two years, the European Commission and the European Central Bank report to the Council of Ministers on the progress made by the Member States in reaching the convergence criteria for joining the euro. The latest convergence report was published in May 2012. Therefore, there is no obligation to publish a convergence report in 2013, except if a Member State asks the Commission for extraordinary assessments outside of the two-year cycle, when they consider they could fulfill the convergence criteria.
The EMU chapter in the Treaty states that all Member States (except Denmark and the UK, in view of their opt-out clauses) are committed to adopting the euro as soon as they reach a high degree of sustainable convergence towards the euro area. Nevertheless, the Treaty does not set the timing for adopting the euro. It allows time for each Member State to make the necessary adjustment and preparations to join. At the same time, the role of the euro as medium-term policy anchor should not be underestimated.
The Commission does not instruct Member States to pursue any particular strategy on euro adoption. However, strong domestic ownership and political commitment for euro adoption are important for achieving sustainable convergence.
The euro: facts and figures
The benefits of the euro are diverse and are felt on different scales, from individuals and businesses to whole economies. They include:
For more information
Latvia: http://ec.europa.eu/economy_finance/euro/countries/latvia_en.htm
The euro: http://ec.europa.eu/economy_finance/euro/index_en.htm
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