convergence criteria


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convergence criteria

requirements before a member of the EUROPEAN UNION may adopt the Euro as its currency as part of ECONOMIC AND MONETARY UNION. The criteria are: the ratio of government deficit to gross domestic product must not exceed 3 per cent; the ratio of government debt to gross domestic product must not exceed 60 per cent; there must be a sustainable degree of price stability and an average inflation rate, observed over a period of one year before the examination, which does not exceed by more than 1.5 percentage points that of the three best performing Member States in terms of price stability; there must be a long-term nominal interest rate which does not exceed by more than two percentage points that of the three best performing Member States in terms of price stability; the normal fluctuation margins provided for by the exchange-rate mechanism must be respected without severe tensions for at least the last two years before the examination.
References in periodicals archive ?
The authorities' commitment to West African Economic and Monetary Union (WAEMU) convergence criteria concerning the overall fiscal deficit, revenue mobilization, the wage bill, and debt is welcome.
Continued implementation of the right mix of macroeconomic and structural policies is needed to preserve hard-won gains, address financial sector vulnerabilities, and contribute to meeting the regional fiscal convergence criteria.
The convergence criteria are legally defined in the Maastricht Treaty and I know that Bulgaria has made a significant progress in meeting those criteria but hasn't met all of them," he added.
The main objective of this research note is to define new (comprehensive) convergence criteria using factor analysis.
As regards the potential structural factors of the Eurozone that contributed to the crisis, literature specifies in particular the differentiation of economic cycles, impermanence of adopted convergence criteria and different levels of economic development of countries admitted to the Eurozone, which additionally reinforce the asymmetric shocks ensuing from the functioning of so-called core countries and peripheral countries within one economic zone.
But despite urgings from the UAE in particular to reconsider, the sultanate remains resolute that it will not join the monetary union because its development goals prevent it from meeting the convergence criteria.
New schedules and possible adjusted convergence criteria are expected by newcomers.
Prague pledged to join the eurozone under its 2004 EU accession terms and now meets the inflation, public finance and interest rate convergence criteria.
Nigeria is the only country to have met the four primary convergence criteria required for attaining the proposed single currency for the 15-member Economic Community of West African States (ECOWAS), according to local media reports Wednesday.
These countries have made uneven progress on the road to euro adoption, but Lithuania stands out from this group as it now fulfils the convergence criteria, EU Commissioner for economic and monetary affairs, Olli Rehn, told a press conference.
Instead, in the second attempt to implement a monetary union (which led to the Maastricht Treaty), it chose the fulfillment of some 'nominal' convergence criteria (inflation, government debt, household deficit, interest rate and exchange rate stability) as a precondition for entrance into the Eurozone (see, eg, James, 2012).
According to the European Commission's latest winter forecast, Lithuania's economy meets the convergence criteria.

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