- EU warns on central bank independence, monetary financing
- Commission publishes convergence report on 7 non-euro members
Laws governing central bank independence and monetary financing in some non-euro European Union countries defy the bloc’s rules on euro adoption, the European Commission and the European Central Bank said.
Legislation in Sweden, Hungary, Poland, Romania, the Czech Republic and Bulgaria aren’t fully compatible with relevant EU norms, according to the convergence report published Tuesday. None of the seven member countries, which also include Croatia, fulfill all conditions required to adopt the euro, it said.
“The seven countries under review comply with most of the quantitative economic criteria, but none of them fulfills all of the obligations laid down in the Treaty, including the legal convergence criteria,” the statement said. “Incompatibilities and imperfections exist in the fields of independence of the central bank, prohibition of monetary financing and central bank integration into the European System of Central Banks at the time of euro adoption.”
The economic crisis of 2008 and the subsequent sovereign debt woes in the euro-area have softened the resolve of the seven EU states to adopt the single currency, an obligation they took on when joining the bloc. None of the reviewed countries have an official target date for joining the euro, and policy makers are handling the timing of euro adoption as a medium-term decision. In Sweden, voters rejected joining the euro in a 2003 referendum.
The requirements for euro adoption, known as the Maastricht Criteria, include price stability, sound public finances, exchange-rate stability and convergence in long-term interest rates.
Of the seven countries reviewed, all but Sweden meet the criteria on price stability, while Swedish inflation is expected to return below the 0.7 percent reference value in the coming months, the report said. All countries fulfill the criterion on the convergence of long-term interest rates.