Eurosystem

Convergence criteria

General conditions

Countries that wish to adopt the euro as their currency must:

  1. Achieve a certain level of economic convergence which is adjusted based on compliance of the criteria established in the Maastricht Treaty.
  2. Achieve convergence of national legislation and the regulations governing their central banks and monetary issues.
  3. Have the approval of the heads of state or government, following a proposal by the European Commission.

Economic convergence

In order to adopt the euro, Member States must have achieved a high level of sustainable economic convergence which is measured based on compliance with the convergence criteria established in the Maastricht Treaty. These are:

  1. Price stability:

    Member States must have a rate of inflation, observed over a period of one year before the examination, that does not exceed by more than 1.5 percentage points that of the three best-performing Member States in terms of price stability.

    Inflation is to be measured using the Consumer Price Index (CPI) on a comparable basis, taking into account the differences in national definitions.

  2. Government finances:

    The financial position of the Public Administrations must be sustainable, without an "excessive public deficit", which means that:

    • The ratio of the forecast or actual government debt to Gross Domestic Product (GDP) must not exceed 3%, unless either the ratio has declined substantially and continuously and reached a level that comes close to the reference value; or, alternatively, the excess over the reference value is exceptional and temporary and the ratio remains close to the reference value.
    • The ratio of government debt to GDP must not exceed 60%, unless the ratio is diminishing significantly and approaching the reference value at a satisfactory rate.
  3. Exchange rate stability:

    Member States must have observed, without serious pressures and for at least the last two years prior to the examination period, normal margins of fluctuation allowed by the exchange rate mechanism of the European Monetary System (EMS). In particular, Member States must not have devalued their currency’s bilateral central rate against any other Member State’s currency on their own initiative for the same period.

  4. Long-term interest rates:

    Observed over a period of one year prior to the examination, the average nominal long-term rate must not exceed the best-performing Member States in terms of price stability by more than 2%.

    Interest rates shall be measured on the basis of long-term government bonds or comparable securities, taking into account differences in national definitions.

  5. Other factors:

    Additionally, the results of the integration of the markets, the situation and performance of the balance of payments on the current account and a study of the evolution of unit labour costs and other price indexes will also be taken into account.