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Convergence Reports: are Cyprus and Malta ready to adopt the Euro?

After careful examination, the Commission will publish today reports, assessing whether the economies of Cyprus and Malta have sufficiently converged towards EU levels – according to the criteria set in the EU Treaty – to adopt the euro on the 1st of January 2008, as it is their wish.

Cyprus and Malta requested the Commission, respectively on 13 and 27 February 2007, to produce individual Convergence Reports assessing their readiness to adopt the Euro according to the economic and legal criteria set out in the treaty. The European Central Bank must produce its own report, expected to be published the same day. The reports assess, whether the two countries have achieved a 'high degree of sustainable convergence' by reference to economic criteria: regarding price stability, public finances, exchange rate stability and long-term interest rates. National legislation must also be in line with EU Economic and Monetary Union rules, and the statutes of the European System of Central Banks and the ECB.

If the Commission concludes that Cyprus and Malta fulfil the conditions, it will propose to the Council that they are ready adopt the Euro. Traditionally, this would be the subject of a discussion at the European Council in June, followed by a formal decision by the EU finance ministers in July. The latter would also decide on the rate at which the Cyprus pound and the Maltese lira would be converted into the Euro. In January, Slovenia became the first of the Member States that joined the EU in May 2004 to adopt the Euro. Slovakia plans to adopt the Euro in 2009. (