Enlargement of the eurozone
The enlargement of the eurozone is an ongoing process within the European Union. All member states of the European Union, except Denmark which negotiated an opt-out from the provisions, are obliged to adopt the euro as their sole currency once they meet the criteria, which include: complying with the debt and deficit criteria outlined by the Stability and Growth Pact, keeping inflation and long-term governmental interest rates below certain reference values, stabilising their currency's exchange rate versus the euro by participating in the European Exchange Rate Mechanism, and ensuring that their national laws comply with the ECB statute, ESCB statute and articles 130+131 of the Treaty on the Functioning of the European Union. The obligation for EU member states to adopt the euro was first outlined by article 109.1j of the Maastricht Treaty of 1992, which became binding on all new member states by the terms of their treaties of accession.
, there are 21 EU member states in the eurozone, of which the first 11 introduced the euro on 1 January 1999 when it was electronic only. Greece joined 1 January 2001, one year before the physical euro coins and notes replaced the old national currencies in the eurozone. Subsequently, the following nine countries also joined the eurozone on 1 January in the mentioned year: Slovenia, Cyprus, Malta, Slovakia, Estonia, Latvia, Lithuania, Croatia, and Bulgaria.
Five remaining states are bound by the EU treaties to introduce the euro once they fulfil certain economic criteria known as the convergence criteria — the Czech Republic, Hungary, Poland, Romania, and Sweden. Since the convergence criteria requires participation in ERM II for a minimum of two years, and non-eurozone member states are responsible for deciding when to join ERM II, they can delay their compliance with the criteria by not joining ERM II.
All non-eurozone member states are assessed for compliance with the convergence criteria by the ECB and the European Commission biennially, with the most recent report published in June 2024. Member states can also request that their compliance be evaluated outside this two-year cycle as of any month of their choosing, as compliance is subject to change throughout the year. Denmark has a treaty opt-out from the obligation to join the eurozone even if it complies with all criteria; historically this also applied to the United Kingdom, until it left the EU on 31 January 2020.
ECB began a two-year preparation phase for the creation of a new digital euro on 1 November 2023, which has been proposed – but not yet decided – to be introduced as an additional digital payment method coexisting with the currently available four types of euro transactions: cash, payment card, bank account, and other digital payments. If the digital euro is adopted, it will be accessible and accepted as a new extra payment method for citizens in the eurozone, and also available for citizens of the [|European microstates] subject to approval of revised monetary agreements. Any noneurozone member state will per article 18 of the proposed Council regulation also be granted the option to adopt the digital euro as a payment method for their citizens – without entering the eurozone, subject to the signing of a digital euro adoption agreement between the ECB and the national central bank of that member state.
A recent study of optimum currency area finds that the current non-euro area members fit the euro area as well as the core euro area countries.
Accession procedure
All EU members which have joined the bloc since the signing of the Maastricht Treaty in 1992 are legally obliged to adopt the euro once they meet the criteria, since the terms of their accession treaties make the provisions on the euro binding on them. In order for a state to formally join the eurozone, enabling them to mint euro coins and get a seat at the European Central Bank and the Eurogroup, a country must be a member of the European Union and comply with five convergence criteria, which were initially defined by the Maastricht Treaty in 1992. These criteria include: complying with the debt and deficit criteria outlined by the Stability and Growth Pact, keeping inflation and long-term governmental interest rates below reference values, and stabilising their currency's exchange rate versus the euro. Generally, it is expected that the last point will be demonstrated by two consecutive years of participation in the European Exchange Rate Mechanism, though according to the Commission "exchange rate stability during a period of non-participation before entering ERM II can be taken into account." The country must also ensure that their national laws are compliant with the ECB statute, ESCB statute and articles 130+131 of the Treaty on the Functioning of the European Union.Since the convergence criteria require participation in the ERM, and non-eurozone member states are responsible for deciding when to join ERM, they can ultimately control when they adopt the euro by staying outside the ERM and thus deliberately failing to meet the convergence criteria until they wish to. In some non-eurozone member states without an opt-out, there has been discussion about holding referendums on approving their euro adoption. Of the 16 states which have acceded to EU since 1992, the only state to have staged a euro referendum to date is Sweden, which in 2003 rejected its government's proposal to adopt the euro in 2006.
Convergence criteria
The convergence progress for the newly acceded EU member states is supported and evaluated by the yearly submission of the "Convergence programme" under the Stability and Growth Pact. As a general rule, the majority of economic experts recommend for newly accessed EU member states with a forecasted era of catching up and a past record of "macroeconomic imbalance" or "financial instability", that these countries first use some years to address these issues and ensure "stable convergence", before taking the next step to join the ERM II, and as the final step ultimately adopt the euro. In practical terms, any non-euro EU member state can become an ERM II member whenever they want, as this mechanism does not define any criteria to comply with. Economists however consider it to be more desirable for "unstable countries" to maintain their flexibility of having a floating currency, rather than getting an inflexible and partly fixed currency as an ERM II member. Only at the time of being considered fully "stable", the member states will be encouraged to enter into ERM II, in which they need to stay for a minimum of two years without presence of "severe tensions" for their currency, while at the same time also ensuring compliance with the other four convergence criteria, before finally being approved to adopt the euro.; Reference values for the HICP criteria and interest rate criteria
The compliance check above was conducted in June 2014, with the HICP and interest rate reference values specifically applying for the last assessment month with available data. As reference values for HICP and interest rates are subject for monthly changes, any EU member state with a euro derogation has the right to ask for a renewed compliance check at any time during the year. For this potential extra assessment, the table below feature Eurostat's monthly publication of values being used in the calculation process to determine the reference value for HICP inflation and long-term interest rates, where a certain fixed buffer value is added to the moving unweighted arithmetic average of the three EU Member States with the lowest HICP inflation rates.
The black values in the table are sourced by the officially published convergence reports, while the lime-green values are only qualified estimates, not confirmed by any official convergence report but sourced by monthly estimation reports published by the Polish Ministry of Finance. The reason why the lime-green values are only estimates is that the "outlier" selection besides depending on a quantitative assessment also depends on a more complicated overall qualitative assessment, and hence it can not be predicted with absolute certainty which of the states the commission will deem to be outliers. So any selection of outliers by the lime-green data lines shall only be regarded as qualified estimates, which potentially could be different from those outliers which the commission would have selected if they had published a specific report at the concerned point of time.
The national fiscal accounts for the previous full calendar year are released each year in April. As the compliance check for both the debt and deficit criteria always awaits this release in a new calendar year, the first possible month to request a compliance check will be April, which would result in a data check for the HICP and interest rates during the reference year from 1 April to 31 March. Any EU member state may also ask the European Commission to conduct a compliance check, at any point of time during the remainder of the year, with HICP and interest rates always checked for the past 12 months – while debt and deficit compliance always will be checked for the three-year period encompassing the last completed full calendar year and the two subsequent forecast years. As of 10 August 2015, none of the remaining euro derogation states without an opt-out had entered ERM II, which makes it highly unlikely that any of them will request that the European Commission conduct an extraordinary compliance check ahead of the publication of the next regular convergence report scheduled June 2016.