New EU edges closer to euro

Latvia, Cyprus and Malta this weekend took the first step to joining the euro by 2007 - one year after joining the EU.

The three countries are admitted to the EU Exchange Rate Mechanism II starting from May 2.

Brussels, the European Central Bank, and EU eurozone finance ministers gave the green light to the candidates late on Friday.

ERM II requires each country to keep its currency pegged to the euro for a two year trial period.

The Cypriot pound is set at €0.585274, the Maltese liri €0.429300 and Latvia’s lat at €0.702804 – currencies are permitted fluctuations of 15 per cent against the euro.

Governments hoping to start using the currency also have to keep their budget deficits below three per cent of GDP, a debt-to-GDP ratio of 60 per cent, and inflation and interest rates close to the eurozone's.

Estonia, Lithuania and Slovenia, also new member states, joined ERM II in June last year.

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