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EDITIONS
Euro-glossary Monday, 30 April, 2001, 11:03 GMT 12:03 UK
Convergence criteria
These are the tests that national economies had to pass in order to be eligible to join the final stage of economic and monetary union - the single currency.

They consist of five criteria, laid out in the Maastricht Treaty:

  • The amount of money owed by a government - known as the budget deficit, has to be below 3% of Gross Domestic Product (GDP) - the total output of the economy.
  • The total amount of money owed by a government, known as the public debt, has to be less than 60% of GDP. The public debt is the cumulative total of each year's budget deficit.
  • Countries should have an inflation rate within 1.5% of the three EU countries with the lowest rate. This was supposed to push down inflation rates and lead to more stable prices.
  • Long-term interest rates must be within 2% of the three lowest interest rates in EU.
  • Exchange rates must be kept within "normal" fluctuation margins of Europe's exchange-rate mechanism.

There was a great deal of disagreement between countries about how strictly these criteria should be interpreted.

But when decision day eventually came, only Greece was told it was not ready to join the single currency with the first wave of countries in 1999. It joined Eurozone at the beginning of 2001.

Denmark, Sweden and the UK all opted to keep their national currencies.

See also:

13 Mar 01 | Euro-glossary
13 Mar 01 | Euro-glossary
07 Dec 00 | Nice summit glossary
13 Mar 01 | Euro-glossary
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