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More Countries Edge “Unevenly” Towards Using the Euro

  • December 9th, 2006
  • Posted by EUEditor

euro-symbol-reduced.jpgA two-yearly report on progress in converting from national currencies to the Euro has found that nine countries scheduled to make the move have been “making progress.”

All member countries of the European Union are committed by treaty to eventually enter the “Euro area”, through taking up the central currency.

However they must qualify by meeting set standards in economic management and performance: on inflation; containment of budget deficits; exchange rate stability; long-term interest rates; and a measure of the “compatibility” of each country’s legislation, e.g. statutes of its reserve bank.

The nine countries just reviewed are made up of eight out of ten new members of the EU, which joined in 2004, and which were not able to meet the Euro standard, (the Czech Republic, Cyprus, Estonia, Hungary, Latvia, Malta, Poland and Slovakia), plus Sweden.

The 2006 “Convergence Report” now published says that all of the countries have succeeded in moving towards uptake of the Euro, but their progress has been “uneven”, some failing to meet standards on different criteria.

So far twelve of the 25 countries in the EU are in the “Euro area”, and Slovenia is scheduled to adopt the currency at the beginning of 2007.

The idea of converting has been defeated in a referendum in Sweden; the United Kingdom and Denmark have opposed the change also, invoking an indefinite delay.

An EU spokesperson said in presenting the 2006 report, 5.12.06, that adoption of the Euro was a “right and an obligation” of all member countries, to which they were legally committed.

“Experience has shown that a referendum is not the best avenue to consider,” the spokesperson said.

Against a backdrop of recent strong exchange rate performances of the Euro, a statement from the European Commission said, ” a well-prepared country is more likely to flourish in a monetary union.”

Reference: Convergence Report 2006, European Commission, Brussels; http://www.ecfineeuropa.cec/economy_finance/publications/convergence/report2006_en.htm (Marked, “available soon as EUROPEAN ECONOMY. No. 1. 2006. Office for Official Publications of the EC”; 8.12.06).

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