ECB Convergence Report - 2008

The euro was introduced on 1 January 1999. As of now, 15 European Union (EU) Member States have adopted the euro in line with the requirements of the Treaty, the most recent ones being Cyprus and Malta on 1 January 2008. This implies that 12 Member States are at present not full participants in Economic and Monetary Union (EMU) and have not yet adopted the euro. Two of these Member States, namely Denmark and the United Kingdom, gave notification that they would not participate in Stage Three of EMU. As a consequence, Convergence Reports for these two Member States only have to be provided if they so request. In the absence of such a request from either country, this Convergence Report examines ten countries: Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia and Sweden. All ten countries are committed by the Treaty to adopt the euro, which implies that they must strive to fulfil all the convergence criteria.

In this report, Slovakia is assessed in somewhat more depth than the other countries under review. This is due to the fact that Slovakia submitted a request for a country examination on 4 April 2008 in view of its intention to adopt the euro as of 1 January 2009. It also has to be taken into account that Slovakia is the first country intending to adopt the euro in the near future whose currency has followed a trend nominal appreciation over several years. This requires an analysis of how the Slovak economy would operate under conditions of irrevocably fixed exchange rates.

This Convergence Report is structured as follows. Chapter 2 describes the framework used for the examination of economic and legal convergence. Chapter 3 provides a horizontal overview of the key aspects of economic convergence. Chapter 4 contains the country summaries, which provide the main results of the examination of economic and legal convergence. Chapter 5 examines the state of economic convergence in each of the ten Member States under review in more detail and provides an overview of the statistical methodology of convergence indicators. Finally, Chapter 6 examines the compatibility between each of these Member States’ national legislation, including the statutes of their NCB, and Articles 108 and 109 of the Treaty and the Statute of the European System of Central Banks (ESCB). [...]

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