- (Photo: EU Commission)
Convergence entails that countries move closer to one another.
To join the single currency (the Euro), EU member states are obliged to meet four criteria, fixed in a Protocol (on the excessive deficit procedure) and in Art 121 ITEC:
- Price stability: The inflation rate must not exceed the inflation rate of the three top-performing Member States by more than 1.5%. The European Central Bank has established that the annual inflation in all EU Member States must be less than 2%.
- Government finances: The annual budget deficit must be below 3% of GDP and overall public debt below 60% of GDP.
- Exchange rates: For two years the currency must be in a fixed relation with the Euro without a devaluation.
- Long-term interest rates: May not exceed the average interest rate of the three best performing Member States by more than 2%. The public debt criterion can be accepted at a higher debt level if the direction is satisfactory.
See Economic and Monetary Union