The euro was introduced on 1 January 1999 in 11 EU Member States. Since then, seven other EU Member States have adopted the single currency, the most recent being Latvia on 1 January 2014. Following Croatia’s accession to the EU on 1 July 2013, there are ten EU countries that do not yet participate fully in EMU, i.e. they have not yet adopted the euro. Two of these, Denmark and the United Kingdom, gave notification that they would not participate in Stage Three of EMU. As a consequence, Convergence Reports only have to be provided for these two countries if they so request. Given the absence of such a request from either country, this report examines eight countries: Bulgaria, the Czech Republic, Croatia, Lithuania, Hungary, Poland, Romania and Sweden. All eight countries are committed under the Treaty on the Functioning of the European Union (hereinafter the “Treaty”) to adopt the euro, which implies that they must strive to fulfil all the convergence criteria.
In this report, Lithuania is assessed in more depth than the other countries under review, since the Lithuanian authorities have on various occasions announced their intention to adopt the euro as of 1 January 2015.
Moreover, from 4 November 2014 onwards each country whose derogation is abrogated will join the Single Supervisory Mechanism (SSM) at the latest on the date on which it adopts the euro. From that date, all SSM-related rights and obligations apply to that country. It is, therefore, of utmost importance that it makes the necessary preparations. In this respect, the ECB attaches great importance to the comprehensive assessment of credit institutions, including the balance sheet assessment that it must carry out before the assumption of its tasks. This is an assessment of the banking system in the Member States participating in the SSM and is carried out by the ECB in cooperation with the national competent authorities of the participating Member States. This assessment, which is not the subject of this report, is to be concluded prior to the assumption by the ECB of its supervisory responsibilities. It includes an asset quality review and a stress test. The objective is to foster transparency, repair balance sheets where needed and enhance confidence in the banking sector. The banking system of any Member State joining the euro area and therefore joining the SSM after the date for the commencement of supervision will be subject to a comprehensive assessment.
This 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 in more detail the state of economic convergence in each of the eight EU Member States under review and provides an overview of the convergence indicators and the statistical methodology used to compile them. Finally, Chapter 6 examines the compatibility of the national legislation of the Member States under review, including the statutes of their NCBs, with Articles 130 and 131 of the Treaty. [...]