By Chris Jones - 4th November 2005
New member states still have considerable work to do if they want to join the single currency, Brussels claims.
A European Commission report reveals that the EU' S ten newest countries remain committed to adopting the euro as early as possible, but that most are still some way from meeting their targets.
Slovakia is the best-prepared of the new member states, with plans already well underway for euro entry in January 2009.
Estonia, Lithuania and Slovenia have also begun preparations, but have just 18 months to be ready for euro entry in January 2007.
Cyprus, Malta and Latvia have the most work to do, with preparations barely underway for a planned adoption in January 2008.
Hungary and the Czech Republic have barely started to think about the euro, but are not expected to join until at least 2010. Poland has yet to set a target date.
“Adequate and timely preparation and information is essential to enable the public to switch over to the euro in complete confidence,” said Economic and Monetary Affairs Commissioner Joaquin Almunia.
“Our report shows that 75 per cent of the population in the new member states expect euro entry to mean higher prices, but data from the current eurozone countries shows this is not true.”
“It is vital that the new member states get the message across that the euro will bring considerable advantages as soon as possible, if they want to meet their ambitious adoption targets.”
“Attitudes to the euro are linked to attitudes to Europe in general, and the reaction to the proposed constitution shows just how fragile these are at the moment, so winning over public opinion is vital.”
Almunia said that the commission would work with the member states to improve their communication strategies on euro entry.
‘Big bang’
The report also shows that the second wave of countries joining the eurozone will adopt a different approach to that used by the first 12 member states.
Most will adopt a “big bang” approach, introducing the new euro notes and coins at the same time as switching over their accounts to the single currency, a process that took three years for the first eurozone countries.
“The situation is different this time, of course, because we can draw on the experience of the first currency changeover, but it will still be extremely complicated to make all the changes at the same time,” Almunia said.
Most countries will also opt for a much shorter transitional period, when both the old and new currencies will circulate – just two weeks compared to several months the first time around.
Convergence criteria
Despite Almunia’s insistence of the urgent need for action, there is in fact no guarantee that the new member states will be allowed to join the single currency on the dates they have set.
A commission report due in 2006 will assess whether the new EU members have met the necessary criteria to be allowed to join the euro.
Countries must show sustainable public finances, price stability and exchange rate stability over at least two years and a level of long-term interest rates before they are allowed to adopt the euro.
“All these criteria have to be met before a country can be allowed to join the euro,” said Almunia.
“The three countries wanting to join in 2007 have had difficulty with meeting these criteria, in particular keeping price inflation under control.”
“But we will take no decision on Estonia, Slovenia and Lithuania, or any of the other countries, until we have looked more closely at the issue next year.”
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