Enlargement of the eurozone
Encyclopedia
The enlargement of the eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
is a continuing process within the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
(EU). All member states of the EU, except for Denmark, the United Kingdom and de facto Sweden, are obliged to adopt the euro as their sole currency when they meet the criteria. This includes two years in the European Exchange Rate Mechanism
European Exchange Rate Mechanism
The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of...
(ERM II) and keeping inflation inline with the EU average.
Eleven EU states were part of the initial introduction in 1999
Introduction of the euro
The euro came into existence on 1 January 1999, although it has been a goal of the European Union and its predecessors since the 1960s. After tough negotiations, particularly due to opposition from the United Kingdom, the Maastricht Treaty entered into force in 1993 with the goal of creating...
. Greece joined in 2001 before the coins and notes were released and the other national currencies were retired. Slovenia joined the Eurozone on 1 January 2007, Cyprus and Malta joined on 1 January 2008, Slovakia joined on 1 January 2009, and Estonia joined the eurozone on 1 January 2011.
Of the remaining states on the agenda, the earliest expected accession is in 2014. Denmark is not obliged to join, but a referendum
Danish European Union opt-outs referendum
Denmark holds a number of "opt-outs" from European Union policies. These opt-outs relate to the Common Security and Defence Policy, citizenship, police and justice, and the adoption of the euro. The present government plans to hold a referendum on abolishing the opt-outs on defence and justice, but...
on the abolition of the opt-out from eurozone membership has been debated. Should the country decide to do so it may join the euro rapidly, as Denmark is already part of the ERM II. The United Kingdom and Sweden are outside of the ERM II.
Accession criteria
In order to join the eurozone officially, (thus being able to mint coins separately), a country must first be a member of the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, and then meet certain economic criteria, including accession to ERM II, which fixes the acceding country's national currency's exchange rate to the euro, within a specified band (normally ±15%).
European microstates
European microstates
The European microstates or ministates are a set of very small states in Europe. While Andorra, Liechtenstein, Malta, Monaco, San Marino, and Vatican City are usually included, Luxembourg and Cyprus share certain features as well...
that have monetary agreements with acceding countries can continue these agreements to mint separate coins on the accession of the larger state, but do not get a say in the economic affairs of the eurozone. This has been used to allow Monaco, San Marino and the Vatican City to mint their own coins, and Andorra is negotiating a similar agreement.
In 2009 the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF) suggested that countries should be allowed to "partially adopt" the euro, which would allow them to use the euro but would not give them a seat on the European Central Bank
European Central Bank
The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
.
Historical enlargements
The first enlargement, Greece, took place on 1 January 2001; before the euro entered its physical form in 2002, but after its formal creation in 1999. The first post-2002 enlargements were to the states who joined in 20042004 enlargement of the European Union
The 2004 enlargement of the European Union was the largest single expansion of the European Union , both in terms of territory, number of states and population, however not in terms of gross domestic product...
. First Slovenia, replacing the Slovenian tolar
Slovenian tolar
The tolar was the currency of Slovenia from 1991 until the introduction of the euro on 1 January 2007. It was subdivided into 100 stotins...
on 1 January 2007, then Cyprus and Malta on 1 January 2008. On 1 January 2009 Slovakia exchanged its koruna
Slovak koruna
In 1993, coins were introduced in denominations of 10, 20 and 50 haliers, 1, 2, 5 and 10 korunas. The 10 and 20 halier coins were taken out of circulation on 31 December 2003....
for the euro and on 1 January 2011 Estonia similarly exchanged its kroon
Estonian kroon
In 1992, coins were introduced in denominations of 5, 10, 20 & 50 senti, as well as 1 kroon. The 1 kroon was struck in cupronickel, the others in aluminum-bronze. However, in 1997, nickel-plated steel 20 senti were introduced, followed by aluminum-bronze 1 kroon in 1998. 5 senti coins were not...
for the euro.
The new EU members which joined bloc during the fifth enlargement wave (2004–2007) are all obliged to adopt the euro under the terms of their accession treaties, however in September 2011, Bulgaria, the Czech Republic, Hungary, Latvia, Lithuania, Poland and Romania said the euro zone they thought they were going to join, a monetary union, may very well end up being a very different union entailing much closer fiscal, economic and political convergence. "All seven countries agree to state that a change in the euro zone's legal status could change the conditions of their adhesion treaties," which "could force them to stage new referenda" on euro take-up, said a diplomatic source close to the talks to AFP.
ERM II members
Apart from Denmark and the United Kingdom, which have opt-outsOpt-outs in the European Union
In general, the law of the European Union is valid in all of the twenty-seven European Union member states. However, occasionally member states negotiate certain opt-outs from legislation or treaties of the European Union, meaning they do not have to participate in certain policy areas...
under the Maastricht Treaty
Maastricht Treaty
The Maastricht Treaty was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands. On 9–10 December 1991, the same city hosted the European Council which drafted the treaty...
, all other EU members are legally obliged to join the eurozone. The following members have acceded to ERM II, in which they must spend two years, before they can adopt the euro.
Denmark
Denmark has pegged its kroneDanish krone
The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre...
to the euro (€1 = DKK 7.46038 ± 2.25%) and the krone remains in the ERM
European Exchange Rate Mechanism
The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of...
. In December 1992 Denmark negotiated a number of opt-out clauses
Opt-outs in the European Union
In general, the law of the European Union is valid in all of the twenty-seven European Union member states. However, occasionally member states negotiate certain opt-outs from legislation or treaties of the European Union, meaning they do not have to participate in certain policy areas...
from the Maastricht treaty
Maastricht Treaty
The Maastricht Treaty was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands. On 9–10 December 1991, the same city hosted the European Council which drafted the treaty...
via the Edinburgh Agreement
Edinburgh Agreement
The Edinburgh Agreement or Edinburgh Decision is a December 1992 agreement reached at a European Council meeting in Edinburgh, UK, that granted Denmark four exceptions to the Maastricht Treaty so that it could be ratified by Denmark. This was necessary because, without all member states of the...
, including not adopting the euro as currency. This was done in response to the Maastricht treaty having been rejected by the Danish people in a referendum earlier that year
Danish Maastricht Treaty referendum, 1992
A referendum on the Maastricht Treaty was held in Denmark on 2 June 1992. It was rejected by 50.7% of voters with a turnout of 83.1%. The rejection was considered somewhat of a blow to the process of European integration, although the process continued...
. As a result of the changes, the treaty was finally ratified in a subsequent referendum held in 1993
Danish Maastricht Treaty referendum, 1993
A second referendum on the Maastricht Treaty was held in Denmark on 18 May 1993. After rejecting the treaty in a referendum the previous year, this time it was approved by 56.7% of voters with an 86.5% turnout.-Background:...
. On 28 September 2000, another referendum
Danish euro referendum, 2000
A referendum on joining the Euro was held in Denmark on 28 September 2000. It was rejected by 53.2% of voters with a turnout of 87.6%.-Background:...
was held in Denmark regarding the euro resulting in a 53.2% vote against joining.
On 22 November 2007, the newly re-elected Danish government declared its intention to hold a new referendum on the abolishment of the four opt-out clauses, including on the euro, by 2011. Several polls have been done each year; in 2008 and 2009 they generally but did not always show support among the Danes for adopting the euro.
The economic crisis has also led to a debate within the Faroe Islands
Faroe Islands
The Faroe Islands are an island group situated between the Norwegian Sea and the North Atlantic Ocean, approximately halfway between Scotland and Iceland. The Faroe Islands are a self-governing territory within the Kingdom of Denmark, along with Denmark proper and Greenland...
, an autonomous Danish dependency outside the EU, about whether the islands should adopt the currency along the lines of other non-EU euro users, as previously they would have maintained their currency if Denmark adopted the euro.
Latvia
Latvia has been a member of the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
since 1 May 2004 and is a member of the Economic and Monetary Union of the European Union
Economic and Monetary Union of the European Union
The Economic and Monetary Union is an umbrella term for the group of policies aimed at converging the economies of members of the European Union in three stages so as to allow them to adopt a single currency, the euro. As such, it is largely synonymous with the eurozone.All member states of the...
. Its currency, the Latvian lats
Latvian lats
The lats is the currency of Latvia. It is abbreviated as Ls. The lats is sub-divided into 100 santīmi ....
, is in ERM II, and floats within 1% of the central rate, Ls 0.702804 = €1. Latvia had originally planned to adopt the euro on 1 January 2008 but this has been put back several times but after being elected in 2011, Latvian President Andris Bērziņš
Andris Bērziņš (Latvian President)
Andris Bērziņš is a Latvian businessman and politician. He is the President of Latvia, having won the presidential election held on 2 June 2011.From 1993 to 2004, Bērziņš was the President of Unibanka.- Early career :...
aims for his country to join in 2014: "Personally I'm very optimistic we'll join the euro on 1 January 2014. It's our goal and we are working hard to implement this process."
Lithuania
The Lithuanian litasLithuanian litas
The Lithuanian litas is the currency of Lithuania. It is divided into 100 centų...
is part of ERM II and in practice it is pegged to the euro at a rate of 3.45280 litai = €1. Lithuania originally set 1 January 2007 as the target date for joining the euro, but their application was rejected by the European Commission because inflation was slightly higher (0.1%) than the permitted maximum. In December 2006 the government approved a new convergence plan which, whilst reaffirming that the government wanted to join the eurozone "as soon as possible", said that expected inflation increases in 2007–8 would mean the best period for joining the euro would be 2010 or after. In December 2007, Prime Minister Gediminas Kirkilas
Gediminas Kirkilas
Gediminas Kirkilas is a former Prime Minister of Lithuania . He was appointed on 4 July 2006 after Zigmantas Balčytis, the provisional Prime Minister, failed to gather the required support from the Seimas. Kirkilas managed to get the necessary support from the Seimas on 4 July 2006...
said Lithuania would be able to join in 2010–11, but increasing inflation in 2008 led banking analysts to put back the expected date to 2013 at the earliest. By the time of the 2010 European sovereign debt crisis
2010 European sovereign debt crisis
From late 2009, fears of a sovereign debt crisis developed among investors concerning some European states, intensifying in early 2010 and thereafter.....
, the expected date had been put further back to 2014.
An opinion poll published in January 2007 suggested that more Lithuanians opposed euro adoption than supported it.
Lithuania has expressed interest in a suggestion from the IMF that countries who aren't able to meet the Maastricht criteria are able to "partially adopt" the euro, using the currency but not getting a seat at the European Central Bank
European Central Bank
The European Central Bank is the institution of the European Union that administers the monetary policy of the 17 EU Eurozone member states. It is thus one of the world's most important central banks. The bank was established by the Treaty of Amsterdam in 1998, and is headquartered in Frankfurt,...
.
Bulgaria
The levBulgarian lev
The lev is the currency of Bulgaria. It is divided in 100 stotinki . In archaic Bulgarian the word "lev" meant "lion".It is speculated that Bulgaria, as a member of the European Union will adopt the Euro in 2015 .- First lev, 1881–1952 :...
is not part of ERM II, but has been pegged to the euro since its launch (€1 = BGN 1.95583). It was previously pegged on a par to the German Mark
German mark
The Deutsche Mark |mark]], abbreviated "DM") was the official currency of West Germany and Germany until the adoption of the euro in 2002. It is commonly called the "Deutschmark" in English but not in German. Germans often say "Mark" or "D-Mark"...
. Hence, Bulgaria already fulfilled the great majority of the EMU
Economic and Monetary Union of the European Union
The Economic and Monetary Union is an umbrella term for the group of policies aimed at converging the economies of members of the European Union in three stages so as to allow them to adopt a single currency, the euro. As such, it is largely synonymous with the eurozone.All member states of the...
membership criteria and must, from 2009, comply with the Maastricht criteria to join the eurozone in 2012, the tentative deadline set by Finance Minister Plamen Oresharski.
While the currency board
Currency board
A currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the exchange rate target....
which pegs Bulgaria to the euro has been seen as beneficial to the country fulfilling EMU criteria so early, the ECB has been pressuring Bulgaria to drop it as it did not know how to let a country using a currency board join the euro. The Prime Minister has stated the desire to keep the currency board until the euro was adopted. However, factors such as a high inflation, an unrealistic exchange rate with the euro and the country's low productivity are negatively affected by the system.
Bulgaria meets three and fails on one criteria in order to join the eurozone. It derogates on the price stability criterion, which envisages that its inflation does not exceed that of the three EU member states with the lowest inflation (Malta, the Netherlands and Denmark) by more than 1.5%. Bulgaria’s inflation in the 12 months to March 2008 reached 9.4%, well above the reference value of 3.2%, the report said.
On the upside, Bulgaria fulfills the state budget criterion, which foresees that the deficit does not exceed 3% of the country’s gross domestic product (GDP). Over the past few years, the report said, the country has consistently improved its budget fundamentals and since 2003, a break-even point, the budget ran surpluses and in 2007 was at 3.4% of GDP. The EC forecasts that it will remain at 3.2% of GDP in both 2008 and 2009.
In regard to public debt, Bulgaria has also been within the prescribed cap of up to 60% of GDP. Government debt has also been declining consistently, from 50% of GDP to 18% in 2007. The expectation is to reach 11% of GDP in 2009.
A recent analysis says that Bulgaria will not be able to join the Eurozone earlier than 2015, due to the high inflation and the repercussions of the global financial crisis of 2008.
Bulgaria was expected to enter ERM II in November 2009, but that target date has been moved.
On 22 December 2009 Simeon Dyankov, Bulgaria's finance minister, said that the country would apply to join the ERM II in March 2010,
but due to a high deficit Bulgaria won't apply to join the ERM II mechanism in 2010.
Czech Republic
The Czech Republic is bound by the Treaty of Accession 2003Treaty of Accession 2003
The Treaty of Accession 2003 was the agreement between the European Union and ten countries , concerning these countries' accession into the EU...
to join the euro at some point, but this is not likely to come soon. The koruna
Czech koruna
The Czech koruna or Czech crown has been the currency of the Czech Republic since 8 February 1993 when, together with its Slovak counterpart, it replaced the Czechoslovak koruna at par....
is not part of ERM II. Since joining the EU in 2004, the Czech Republic has adopted a fiscal and monetary policy that aims to align its macroeconomic conditions with the rest of the European Union. Currently, the most pressing issue is the large Czech fiscal deficit. Originally, the Czech Republic aimed for entry into the ERM II in 2008 or 2009, but the current government has officially dropped the 2010 target date, saying it will clearly not meet the economic criteria.
Although the country is economically better positioned than other EU Members to join the euro, it is not expected before 2015 due to the political reluctance in this subject. Finance Minister of the interim government, Eduard Janota
Eduard Janota
Eduard Janota was a Czech economist. Between 2009 and 2010, he served as the Minister of Finance in the caretaker government of Jan Fischer.On 20 May 2011, he died at age 59, while playing tennis.- References :...
, said in Brussels in January 2010 that it was unrealistic for the Czech Republic to adopt the euro in 2015 without a profound public finance reform. Central bank governor Zdeněk Tůma
Zdenek Tuma
Zdeněk Tůma is a Czech economist and a former Governor of the Czech National Bank since 1 December 2000. He was confirmed by President Václav Klaus for another six-year term on 11 February 2005. Tůma resigns as of 30 June 2010...
even speculated about 2019. The debt crisis in the eurozone decreased interest in the Czech Republic towards it.
In late 2010 a discussion arose within the Czech government about negotiating an opt-out from joining the Eurozone. This discussion was partially initiated by Euro-sceptic Czech President Václav Klaus
Václav Klaus
Václav Klaus is the second President of the Czech Republic and a former Prime Minister .An economist, he is co-founder of the Civic Democratic Party, the Czech Republic's largest center-right political party. Klaus is a eurosceptic, but he reluctantly endorsed the Lisbon treaty as president of...
. Czech Prime Minister Petr Nečas
Petr Necas
Petr Nečas is the current Prime Minister of the Czech Republic and Leader of the Civic Democratic Party. He was sworn into office on 28 June 2010....
later stated that no opt-out is needed because Czech Republic can't be forced to join the ERM II mechanism and therefore will itself decide when or if to fulfill one of the obligatory criteria to join the Eurozone, which is approach very similar to the one of Sweden. Nečas also stated that his cabinet
Petr Nečas's Cabinet
- Government ministers :- References :*...
will not decide upon the joining during its term which is due to expire in 2014 and Czech Republic therefore will not be able to become a member of the Eurozone sooner than in 2017.
Hungary
Hungary originally hoped to adopt the euro by 1 January 2010. Most financial studies, such as those produced by Standard & Poor'sStandard & Poor's
Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
and by Fitch Ratings
Fitch Ratings
The Fitch Group is a majority-owned subsidiary of FIMALAC, headquartered in Paris. Fitch Ratings, Fitch Solutions and Algorithmics, are part of the Fitch Group....
, suggested that Hungary would be unable to adopt the common European currency on schedule, due to the country's high deficit
Economy of Hungary
The economy of Hungary is a medium-sized, structurally, politically and institutionally open economy in Central Europe and is part of the European Union's single market...
, which in 2006 exceeded 10% of the GDP. The deficit fell below 5% of GDP in 2007, and was expected to be 3.8% at the end of 2008.
According to Reuters, central bank Governor András Simor expected to sit down with the government in the first half of 2009 "to discuss euro adoption". In 2009, Hungary's finance minister said that Hungary may start talks on joining ERM II near the end of 2009, and enter the Eurozone in 2013–2014 at the earliest.
Poland
Poland is bound by the Treaty of Accession 2003Treaty of Accession 2003
The Treaty of Accession 2003 was the agreement between the European Union and ten countries , concerning these countries' accession into the EU...
to join the euro at some point, but current indications are that this will not be for several years to come as economic criteria must be met. The złoty is not part of ERM II, itself a requirement for euro membership.
The Finance Minister Dominik Radziwill said on 10 July 2009 that Poland could enter the Eurozone in 2014, meeting the fiscal criteria in 2012. In 2010, the eurozone's debt crisis caused Poles' interest to cool, with nearly half of the population opposed to entry.
Romania
Romania is scheduled to replace the current national currency, the Romanian leuRomanian leu
The leu is the currency of Romania. It is subdivided into 100 bani . The name of the currency means "lion". On 1 July 2005, Romania underwent a currency reform, switching from the previous leu to a new leu . 1 RON is equal to 10,000 ROL...
, with the euro once Romania fulfils the convergence criteria
Convergence criteria
The euro convergence criteria are the criteria for European Union member states to enter the third stage of European Economic and Monetary Union and adopt the euro as their currency...
. The euro is scheduled to be adopted by Romania in 2015. According to the Romanian government, it will not be able to join the European Exchange Rate Mechanism before 2013-2014.
Sweden
According to the 1994 accession treaty, approved by referendum (52% in favour of the treaty), Sweden is required to join the euro if, at some point, the convergence criteria are fulfilled. However, on 14 September 2003, 56% of Swedes voted against adopting the euro in a second referendumReferendums in Sweden
Since the introduction of parliamentarism in Sweden, six referendums have been held. The constitution of 1974 provides for binding referendums. However, none of the referendums held have been binding but rather have been of an advisory and consultative nature and not formally binding on the...
. The Swedish government has argued that staying outside the euro is legal since one of the requirements for eurozone membership is a prior two-year membership of the ERM II; by simply choosing to stay outside the exchange rate mechanism, the Swedish government is provided a formal loophole avoiding the requirement of adopting the euro. Most of Sweden's major parties continue to believe that it would be in the national interest to join, but they have all pledged to abide by the result of the referendum for the time being and show no interest in raising the issue.
Before the September 2006 parliamentary elections, all major parties agreed not to raise the question before the next parliamentary elections (September 2010). The parties seem to agree that Sweden would not adopt the euro until after a second referendum. Prime Minister Fredrik Reinfeldt
Fredrik Reinfeldt
John Fredrik Reinfeldt is the Prime Minister of Sweden, leader of the liberal conservative Moderate Party and former President of the European Council...
stated in December 2007 that there will be no referendum until there is stable support in the polls. The polls have generally showed stable support for the "no" alternative, except some polls in 2009 showing a support for "yes". In 2010 the polls showed strong support for "no" again.
Denmark
Denmark is not obliged to join but is an ERM II member.Read more about Denmark under the ERM II members headline.
United Kingdom
The British currency is the pound sterlingPound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
and the country has an opt-out from eurozone membership. The Conservative-Liberal Democrat coalition government
United Kingdom coalition government (2010–present)
The ConservativeLiberal Democrat coalition is the present Government of the United Kingdom, formed after the 2010 general election. The Conservative Party and the Liberal Democrats entered into discussions which culminated in the 2010 coalition agreement, setting out a programme for government...
elected in 2010 has pledged not to join the euro during its term of office, due to expire in 2015.
The United Kingdom redesigned most of its coinage in 2008. The German newspaper Der Spiegel
Der Spiegel
Der Spiegel is a German weekly news magazine published in Hamburg. It is one of Europe's largest publications of its kind, with a weekly circulation of more than one million.-Overview:...
saw this as an indication that the country has no intention of switching to the euro within the foreseeable future. In December 2008, José Barroso, the President of the European Commission
President of the European Commission
The President of the European Commission is the head of the European Commission ― the executive branch of the :European Union ― the most powerful officeholder in the EU. The President is responsible for allocating portfolios to members of the Commission and can reshuffle or dismiss them if needed...
, told French radio that some British politicians were considering the move because of the effects of the global credit crisis; the office of the Prime Minister, Gordon Brown
Gordon Brown
James Gordon Brown is a British Labour Party politician who was the Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 until 2010. He previously served as Chancellor of the Exchequer in the Labour Government from 1997 to 2007...
, denied that there was any such change in official policy. In February 2009, Monetary Policy Affairs Commissioner Joaquin Almunia said "The chance that the British pound sterling will join: high."
The Sovereign Base Areas
Sovereign Base Areas
The Sovereign Base Areas are military bases located on territory in which the United Kingdom is sovereign, but which are separated from the ordinary British territory....
of Akrotiri and Dhekelia
Akrotiri and Dhekelia
The Sovereign Base Areas of Akrotiri and Dhekelia are two British-administered areas comprising a British Overseas Territory on the island of Cyprus administered as Sovereign Base Areas of the United Kingdom...
introduced the euro at the same time as Cyprus, on 1 January 2008. Previously, they used the Cypriot Pound
Cypriot pound
The pound, also known as the lira , was the currency of Cyprus, including the Sovereign Base Areas in Akrotiri and Dhekelia, until 31 December 2007, when the Republic of Cyprus adopted the euro...
. They do not have separate euro coins.
Croatia
It is proposed that Croatia will become a member of the EU in mid-2013. Croatia would then be obliged to eventually adopt the euro. In 2006, Croatia fulfilled the convergence criteriaConvergence criteria
The euro convergence criteria are the criteria for European Union member states to enter the third stage of European Economic and Monetary Union and adopt the euro as their currency...
(inflation 2.6%, budget balance −3.0%, public debt 56.2%), however Croatia would still have to spend two years in ERM II after it acceded.
Iceland
Due to instability in the Icelandic krónaIcelandic króna
The króna is the currency of Iceland. The króna is technically subdivided into 100 aurar , but in practice this subdivision is no longer used....
there has been discussion in Iceland about adopting the euro. However, according to Jürgen Stark
Jürgen Stark
Jürgen Stark is a German economist who has been a member of the Executive Board of the European Central Bank from June 2006, but announced in September 2011 he would resign later that year...
, a Member of the Executive Board of the European Central Bank, "Iceland would not be able to adopt the EU currency without first becoming a member of the EU". Iceland has since applied for EU membership
Iceland and the European Union
Iceland applied to join the European Union on 16 July 2009. Negotiations formally began 27 July 2010 and, despite Iceland already being heavily integrated into the EU market, will face contentious issues on fisheries which could potentially derail an agreement...
.
Iceland has a problem with the convergence criteria
Convergence criteria
The euro convergence criteria are the criteria for European Union member states to enter the third stage of European Economic and Monetary Union and adopt the euro as their currency...
, from 2008 and on. Inflation 10–15% (2008–2009), budget deficit 24 Bn ISK, 6.9% of GNP, government debt 1400 Bn ISK (estimate end 2009, 400% of GNP). There are hopes for improvements, much lower estimated inflation in 2010, but debt will remain a problem.
Andorra
Andorra is currently making de facto use of the euro. In 2011 Andorra and the EU signed a monetary agreement. When it is ratified Andorra will be an official Eurozone member and mint its own coins, possibly in 2013.New Caledonia, French Polynesia and Wallis and Futuna
The French overseas collectivities French PolynesiaFrench Polynesia
French Polynesia is an overseas country of the French Republic . It is made up of several groups of Polynesian islands, the most famous island being Tahiti in the Society Islands group, which is also the most populous island and the seat of the capital of the territory...
and Wallis and Futuna
Wallis and Futuna
Wallis and Futuna, officially the Territory of the Wallis and Futuna Islands , is a Polynesian French island territory in the South Pacific between Tuvalu to the northwest, Rotuma of Fiji to the west, the main part of Fiji to the southwest, Tonga to the southeast,...
have declared themselves in favour of joining the eurozone, replacing the CFP franc
CFP franc
The CFP franc is the currency used in the French overseas collectivities of French Polynesia, New Caledonia and Wallis and Futuna. The initials CFP originally stood for Colonies Françaises du Pacifique...
with the euro. However, New Caledonia
New Caledonia
New Caledonia is a special collectivity of France located in the southwest Pacific Ocean, east of Australia and about from Metropolitan France. The archipelago, part of the Melanesia subregion, includes the main island of Grande Terre, the Loyalty Islands, the Belep archipelago, the Isle of...
has not yet made any decision, since an independence referendum may be held in 2014 or later, and opinions differ about whether the euro should be used or not in the future. The French government has required that all three entities will have to decide in favour to join. After such a decision, the government would make the application on their behalf at the European Council, and the switch to euro could be made after a couple of years.
Summary of adoption progress
The new member states, who have joined the union in 2004 and later, shall adopt the euro as soon as they meet the criteria. For them, the single currency was "part of the package" of European Union membership. Unlike for the UK and Denmark, "opting out" is not permitted.The remaining states are expected to enter the third stage of the EMU
Economic and Monetary Union of the European Union
The Economic and Monetary Union is an umbrella term for the group of policies aimed at converging the economies of members of the European Union in three stages so as to allow them to adopt a single currency, the euro. As such, it is largely synonymous with the eurozone.All member states of the...
and adopt the euro at different pace: 2012 for Bulgaria and Latvia; early 2013 for Lithuania; 2014 or 2015 for Poland; 2015 for Romania. The Czech Republic was set to join on 1 January 2010, but can no longer do so due to economic conditions. A new date has not been set; it might not be before 2015. Hungary has also abandoned its original target date 2010, without setting any new date.
On 16 May 2006, the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
recommended Slovenia to become a new member of the eurozone. This occurred on 1 January 2007. In May 2007, the European Commission recommended the same for Cyprus and Malta, and their accession to the eurozone took place on 1 January 2008. On 7 May 2008, the European Commission recommended the same for Slovakia, which joined the eurozone on 1 January 2009.
Showing the ability to move towards full economic and monetary union
Economic and monetary union
An economic and monetary union is a type of trade bloc which is composed of an economic union with a monetary union. It is to be distinguished from a mere monetary union , which does not involve a common market. This is the fifth stage of economic integration...
is one requisite of "good membership". The ECB and European Commission produce reports every two years analysing the economic and other conditions of non-eurozone EU members, reporting on their suitability for joining the eurozone. The first to include the 10 new members was published in October 2004.
| State |
Target |
ERM entry |
Co- ordinating institution |
Changeover plan |
Intro- duction |
Dual circulation period |
Exchange till |
Dual price display |
National mint |
Coin design |
Currency needed |
Law |
Commu- nication strategy |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 January 2015 | 2nd half of 2011 | Not yet approved | 15 days | Central bank: indefinitely | Yes Bulgarian Mint The Bulgarian Mint , established in 1952, is solely responsible for the production of legal tender coins in Bulgaria. It is owned by the Bulgarian National Bank.... |
Approved Bulgarian euro coins Bulgaria aims to join the euro zone in more than three years. The country has set itself a target date of 1 January 2015 . The euro coins have not been designed yet, but the motif for all coins has been chosen to be the Madara Rider.-Selecting the design:... 1 design |
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| Not set | Unknown | Big-Bang | Yes | Public survey under consideration Polish euro coins Under the terms of the Treaty of Accession 2003, all new Member States "shall participate in the Economic and Monetary Union from the date of Accession as a Member State with a derogation", which means that Poland is obliged to introduce the euro, which will replace its current currency, the Złoty... |
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| Not before 2014 | 28 June 2004 | Commission for the Coordination of the Adoption of the euro in Lithuania, created on 30 May 2005 | First version approved by the government on 27 September 2005 | Big-Bang |
60 calendar days before and after €-day | Yes | Approved Lithuanian euro coins Lithuanian euro coins share a similar national side for all eight coins, and are expected to be issued from 2013 on. The difference between the coins are that one and two euro coins have vertical lines on the outer circle, the fifty, twenty and ten cent coins have horizontal lines on the outer... 3 designs |
118.3 million banknotes, 290 million coins | Draft law on the adoption of the euro is prepared | Endorsed by the government on 27 September 2005 | |||
| 1 January 2015 | Expected in 2013-2014 | Inter-institutional working group MoF-NBP | 11 months | Yes | Not yet decided |
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| Not before 2014 | 2 May 2005 | The Steering Committee for the preparation and coordination of the euro changeover was established on 18 July 2005 | Approved on 6 July 2005 | Big-Bang with possible phase out features | 2 weeks | October 2007 – June 2008 | No | Approved Latvian euro coins Latvian euro coins feature three separate designs. The design of the national side was made public in July 2006 on the home page of the National Bank of Latvia... 3 designs |
87 million banknotes and 300 million coins | ||||
| Not set | Not before 2015 | Approved on 11 April 2007 | Big-Bang | 5 months before adoption 12 months after adoption |
Yes | Competition under consideration Czech euro coins The Czech Republic has been a member of the European Union since May 2004. Its currency, the Czech koruna, is not currently participating in ERM II.-Adopting the euro:... |
230 million banknotes and 950 million coins | ||||||
| Not set | Expected in 2011 | Preparatory work is ongoing in the Ministry of Finance and Magyar Nemzeti Bank (Central Bank of Hungary) | Big-Bang with possible phase out features |
1 month | Yes | Not yet decided Hungarian euro coins Hungary can replace its currency, the forint at the earliest on 1 January 2020, according to Viktor Orbán, the prime minister of the country. There is no target date and the forint is not part of European Exchange Rate Mechanism... |
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| Possibility of a future referendum Danish European Union opt-outs referendum Denmark holds a number of "opt-outs" from European Union policies. These opt-outs relate to the Common Security and Defence Policy, citizenship, police and justice, and the adoption of the euro. The present government plans to hold a referendum on abolishing the opt-outs on defence and justice, but... |
1 January 1999 | Yes | |||||||||||
| Not under consideration | Not under consideration | ||||||||||||
| Not under consideration | Not under consideration |