Making it to the Euro

The upcoming enlargement of the European Union in May is a major focus not only for governments in the acceding countries, but also for their central banks. Upon entry, they will become members of the European Central Bank, which means that the new members are expected to take active steps towards fulfilling the necessary conditions for future admission into the eurozone.

Even though actual enlargement of the eurozone remains in the relatively distant future - the earliest possible date being January 2007 - the accession countries must prepare their entry strategies well in advance. This is why in most accession countries last year, central banks and governments stepped up co-operation on defining joint positions on adopting the euro.

Similarly, there were intense debates within the EU, culminating with the adoption of the ECB's Policy Position on Exchange Rate Issues Relating to the Acceding Countries. The Policy Position expressed the ECB Governing Council's stance on membership of the exchange rate mechanism (ERM II), a key precondition for future eurozone entry.

Debate was heated. The accession countries had to decide the optimal timing for eurozone enlargement - a difficult task, because economic theory gives no clear answers in this respect, and because several accession countries are wrestling with fiscal imbalances well above the Maastricht Treaty's ceiling of 3% of GDP.