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THE CONVERGENCE CRITERIA

General conditions

The countries that wish to adopt the euro as their currency must:

  1. Achieve a certain level of economic convergence, assessed based on compliance with 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, the Member States must achieve a high lever of sustainable economic convergence, which is assessed based on fulfilment of the convergence criteria established in the Maastricht Treaty. These are:

  1. Price stability:

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

    Inflation is measured using the Retail Price Index (RPI) on a comparable basis, taking into account the differences in definitions.

  2. Government finances:

    The financial positions of the Public Administrations must be sustainable, without an "excessive public deficit", which means, pursuant to Article 104, that:

    • The ratio of the forecasted or real public deficit to gross domestic product must not exceed 3%, unless the ratio has declined substantially and continuously, reaching a level close to the reference percentage; or the reference percentage is exceeded only exceptionally or temporarily and the ratio remains close to the reference percentage.
    • The ratio of public debt to gross domestic product must not exceed 60% of the gross domestic product, unless the ratio has sufficiently diminished and is approaching the reference percentage at a satisfactory pace".
  3. Exchange rate stability:

    The Member State must have observed, without severe tensions and for at least two years prior to examination, the normal fluctuation margins provided for by the exchange-rate mechanism of the European Monetary System. Specifically, it must not have devalued, during the same period and at its own initiative, the bilateral central rate for its currency against any other Member State's currency.

  4. Long-term interest rates:

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

    The interest rates are measured with reference to long-term government bonds or other comparable securities, taking into account the differences in national definitions.

  5. Other factors:

    Additionally, other factors also taken into account are the results of market integration, the situation and performance of the current account balance of payments and a study of labour costs and other price indexes.

The convergence criteria and Spain

In the case of Spain, the graph shows the degree of compliance with these criteria at the end of 1997. Updated performance of these indicators is shown monthly in charts 2.7 Archivo PDF: Enlace en nueva ventana and 2.8 Archivo PDF: Enlace en nueva ventana in the Bank of Spain's Statistics Bulletin.

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