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Deutscher Bundestag Drucksache 18/173018. Wahlperiode
10.06.2014
Unterrichtungdurch das Bundesministerium der Finanzen
gemäß § 9a des Gesetzes über die Zusammenarbeit von
Bundesregierung und Deutschem Bundestag in Angelegenheiten der
Europäischen Union Beitritt Litauens zum Euroraum
Schreiben des Bundesministeriums der Finanzen – EB3 – Vw
9536/11/10010 – vom 10. Juni 2014 mit folgenden Anlagen:
Anlage 1 Wesentliche Ergebnisse der Konvergenzberichte der
Europäischen Kommission und der Europäischen Zentralbank (EZB)
Anlage 2 Konvergenzbericht der Europäischen Kommission
(englisch)
Anlage 3 Konvergenzbericht der EZB (deutsche Kurzfassung)
Anlage 4 Konvergenzbericht der EZB (englische Langfassung)
Anlage 5 Vorschlag der Europäischen Kommission für einen
Beschluss des Rates über die Einführung des Euro in Litauen am 1.
Januar 2015 (deutsch)
Anlage 6 Vorschlag der Europäischen Kommission für eine
Verordnung des Rates zur Änderung der Verordnung (EG) Nr. 974/98
des Rates im Hinblick auf die Einführung des Euro in Litauen
(deutsch)
Die Republik Litauen beabsichtigt als 19. Mitgliedsland, der
dritten Stufe der Wirt-schafts- und Währungsunion zum 1. Januar
2015 beizutreten. Die am 4. Juni 2014 veröffentlichten
Konvergenzberichte der Europäischen Kommission und der
Europäi-schen Zentralbank (EZB) kommen zu dem Ergebnis, dass
Litauen die Voraussetzun-gen für den Beitritt, die sogenannten
Konvergenzkriterien, erfüllt. Ebenfalls am 4. Juni 2014 hat die
Europäische Kommission einen Vorschlag für einen Beschluss des
Rates
Die Berichte der Europäischen Kommission und der EZB würdigen
die erfolgreichen Anstrengungen Litauens, die Konvergenzkriterien
für den Eurobeitritt zu erfüllen. Im Einzelnen attestieren die
Berichte, dass die rechtliche Konvergenz gegeben ist, die
-stabilität gegenüber dem Euro besteht und sich die
realwirtschaftliche Konvergenz als hinreichend darstellt.
Die Bundesregierung teilt die Gesamteinschätzung der
Konvergenzberichte und beab-sichtigt, dem Beschlussvorschlag der
Europäischen Kommission zum Beitritt Litau-ens zum Euroraum
zuzustimmen.
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Auf europäischer Ebene ist für das weitere Verfahren
entsprechend Artikel 140 Ab-satz 2 des Vertrags über die
Arbeitsweise der Europäischen Union (AEUV) folgender Zeitplan
vorgesehen: Nach Befassung des Rates für Wirtschaft und Finanzen am
19./20. Juni 2014, erfolgt am 26. Juni 2014 eine Aussprache im
Europäischen Rat.
-hörung des Europäischen Parlaments am 14. Juli 2014 statt.
Daran anschließend trifft der Rat die abschließende Entscheidung
voraussichtlich noch im Juli 2014.
Das Gesetz über die Zusammenarbeit von Bundesregierung und
Deutschem Bundes-tag in Angelegenheiten der Europäischen Union
(EUZBBG) sieht in § 9a ein beson-deres parlamentarisches
Beteiligungsverfahren für Fälle der Einführung des Euro in einem
Mitgliedstaat vor. Vor der abschließenden Entscheidung im Rat
sollen der Deut-sche Bundestag und die Bundesregierung das
Einvernehmen herstellen. Ich weise den Deutschen Bundestag in
diesem Zusammenhang vorsorglich auf sein Recht zur Stel-lungnahme
hin.
Im Hinblick auf den dargestellten, engen zeitlichen
Beratungsverlauf auf europäischer Ebene bitte ich den Deutschen
Bundestag, von seinem Recht zur Stellungnahme so frühzeitig wie
möglich Gebrauch zu machen, damit die Bundesregierung, rechtzeitig
vor der Aussprache im Europäischen Rat am 26. Juni 2014, ihre
Haltung zum Beitritts-gesuch Litauens deutlich machen kann. In
einem Schreiben vom 14. Mai 2014 unter-richtete die Bundesregierung
den Deutschen Bundestag vorsorglich über den zeitli-chen
Beratungsverlauf auf europäischer Ebene. Die klare Positionierung
Deutschlands zur Erweiterung des Euroraums, wenn alle
Voraussetzungen für den Beitritt erfüllt sind, ist ein wichtiges
Signal sowohl gegenüber Litauen als auch für den Euroraum
insgesamt.
Mit Blick auf das Ziel, Einvernehmen mit dem Deutschen Bundestag
herzustellen, stehe ich für eine weitergehende Unterrichtung zur
Verfügung. Zur besseren Übersicht übersende ich Ihnen mit diesem
Schreiben sechs Anlagen, insbesondere als Anlage 1 eine Darstellung
der wesentlichen Inhalte der Konvergenzberichte der Europäischen
Kommission und der Europäischen Zentralbank. Einige der anliegenden
Dokumente liegen gegenwärtig nur in Englisch vor.
Die Bundesregierung wird im Rahmen ihrer fortlaufenden
Unterrichtung über den Rat Wirtschaft und Finanzen kontinuierlich
über die weitere Entwicklung und Auswirkun-gen der Vorgänge
informieren.
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Member States
BG BulgariaCZ Czech RepublicHR CroatiaLT LithuaniaHU HungaryPL
PolandRO RomaniaSE SwedenEA Euro areaEA-18 Euro area, 18 Member
StatesEA-17 Euro area, 17 Member States before 2014EU-28 European
Union, 28 Member StatesEU-27 European Union, 27 Member States
before July 2013 (i.e. EU-28 excl. HR)EU-25 European Union, 25
Member States before 2007 (i.e. EU-27 excl. BG and RO)EU-15
European Union, 15 Member States before 2004
Currencies
EUR EuroECU European currency unitBGN Bulgarian levCZK Czech
korunaHRK Croatian kunaLTL Lithuanian litasHUF Hungarian forintPLN
Polish zlotyRON Romanian leu (ROL until 30 June 2005)SKK Slovak
korunaSEK Swedish kronaDEM Deutsche MarkUSD US dollarSDR Special
Drawing Rights
Central Banks
BNB Bulgarska narodna banka (Bulgarian National Bank – central
bank of Bulgaria)� � � � � �– central bank of the Czech
Republic)
HNB Hrvatska narodna banka (Croatian National Bank – central
bank of Croatia)MNB Magyar Nemzeti Bank (Hungarian National Bank –
central bank of Hungary)NBP Narodowy Bank Polski (National Bank of
Poland – central bank of Poland)BNR � � � � � � � �– central bank
of Romania)
Other abbreviations
AMR Alert Mechanism ReportBoP Balance of PaymentsBPO Business
process outsourcingBSE Budapest Stock ExchangeCAR Capital adequacy
ratioCBA Currency board arrangementCDS Credit Default SwapsCEE
Central and Eastern Europe
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CIS Commonwealth of Independent StatesCIT Corporate Income
TaxCPI Consumer price indexCR5 Concentration ratio (aggregated
market share of five banks with the largest market share)EC
European CommunityECB European Central BankEDP Excessive Deficit
ProcedureEERP European Economic Recovery PlanEMI European Monetary
InstituteEMS European Monetary SystemEMU Economic and monetary
unionERM II Exchange rate mechanism IIESA 95 European System of
AccountsESCB European System of Central BanksEU European
UnionEurostat Statistical Office of the European UnionFESE
Federation of European Securities ExchangesFDI Foreign direct
investmentFGS Funding for Growth SchemeFSA Financial Supervisory
AuthorityFSAP Financial Sector Action PlanGDP Gross domestic
productHICP Harmonised index of consumer pricesHFSA Hungarian
Financial Supervisory AuthorityKNF Komisja Nadzoru Finansowego
(Polish Financial Supervision Authority)MFI Monetary Financial
InstitutionMIP Macroeconomic Imbalance ProcedureMTO Medium-term
objectiveNCBs National central banksNEER Nominal effective exchange
rateNIK � � � � � � �NPL Non-performing loansOJ Official JournalOJL
Official Journal LexPIT Personal Income TaxPPS Purchasing Power
StandardPPP Purchasing Power PercentageR&D Research and
developmentREER Real effective exchange rateSITC Standard
International Trade ClassificationSKOK � � -Kredytowe (Credit
Union)TEC Treaty establishing the European CommunityTFEU Treaty on
the Functioning of the European UnionULC Unit labour costsVAT Value
added taxVSE Vilnius Stock ExchangeWSE Warsaw Stock ExchangeZSE
Zagreb Stock Exchange
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The Convergence Report and its Technical Annex were prepared in
the Directorate-General for Economic� � � � � � � � � � � � � �
Jordan and Julda Kiel
Other contributors were Ronald Albers, Benjamin Angel, Natasha
Arvaniti, Wojciech Balcerowicz,� � � � � � � � � � � �
Dobrovolný, Patrick D'Souza, Norbert Gaál, Hana Genorio, Nikolay
Gertchev, Isabel Grilo, Renata� � � � � � � � � � �
Csanád Sándor Kiss, Ewa Klima, Daniel Kosicki, Mihály Kovács,
Joost Kuhlmann, Cvetan Kyulanov,Martin Larch, Jessica Larsson, � �
� � � � � � �Schmitt- � � � � � � � � � �
� � � � � � � � � � � tersteller� � �
Statistical assistance was provided by Gerda Symens and André
Verbanck, administrative assistance byLina Chahrour and Greet De
Pauw.
The report was coordinated by Balázs Forgó under the supervision
of Paul Kutos, Head of Unit andapproved by Sean Berrigan, Director,
Maarten Verwey, Deputy Director General, and Marco Buti,Director
General.
Questions and comments may be referred to Balázs Forgó
([email protected]).
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EUROPEANCOMMISSION
Brussels, XXXCOM(2014) 326
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT ANDTHE
COUNCIL
CONVERGENCE REPORT 2014
(prepared in accordance with Article 140(1) of the Treaty on the
Functioning of theEuropean Union)
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1. PURPOSEOFTHEREPORT
Article 140(1) of the Treaty on the Functioning of the European
Union (hereafterTFEU) requires the Commission and the European
Central Bank (ECB) to report tothe Council, at least once every two
years, or at the request of a Member State with aderogation1, on
the progress made by the Member States in fulfilling their
obligationsregarding the achievement of economic and monetary
union. The latest Commissionand ECB Convergence Reports relating to
all Member States with a derogation wereadopted in May 20122.
The 2014 Convergence Report covers the following eight Member
States with aderogation: Bulgaria, the Czech Republic, Croatia,
Lithuania, Hungary, Poland,Romania and Sweden3. A more detailed
assessment of the state of convergence inthese Member States is
provided in a Technical Annex to this Report (SWD(2014)177). At the
time of the Convergence Report in 2012, Member States had
shownuneven progress with convergence, as many of them were
undergoing significantadjustments of previously accumulated
macroeconomic imbalances, against thebackground of the economic and
financial crisis. The present examination takesplace in a still
difficult external environment, though with a generally
strongerrecovery in Member States with a derogation and lower risk
perception by financialmarkets.
The content of the reports prepared by the Commission and the
ECB is governed byArticle 140(1) of the TFEU. This Article requires
the reports to include anexamination of the compatibility of
national legislation, including the statutes of thenational central
bank, with Articles 130 and 131 of the TFEU and the Statute of
theEuropean System of Central Banks and of the European Central
Bank (hereafterESCB/ECB Statute). The reports must also examine
whether a high degree ofsustainable convergence has been achieved
in the Member State concerned byreference to the fulfilment of the
convergence criteria (price stability, publicfinances, exchange
rate stability, long-term interest rates), and by taking account
ofother factors mentioned in the final sub-paragraph of Article
140(1) of the TFEU.The four convergence criteria are developed in a
Protocol annexed to the Treaties(Protocol No 13 on the convergence
criteria).
The economic and financial crisis along with the recent
euro-area sovereign debtcrisis, has exposed gaps in the economic
governance system of the Economic andMonetary Union (EMU) and
showed that its existing instruments need to be usedmore
comprehensively. With the aim of ensuring a sustainable functioning
of EMU,an overall strengthening of economic governance in the Union
has been undertakensince then. The assessment of convergence is
thus aligned with the broader"European Semester" approach which
takes an integrated and upstream look at theeconomic policy
challenges facing the EMU in ensuring fiscal
sustainability,competitiveness, financial market stability and
economic growth. The keyinnovations in the area of governance
reform, reinforcing the assessment of each
1 The Member States that have not yet fulfilled the necessary
conditions for the adoption of the euro are referred to as "Member
Stateswith a derogation". Denmark and the United Kingdom negotiated
opt-out arrangements before the adoption of the Maastricht Treaty
anddo not participate in the third stage of EMU.
2 In 2013, the Commission and ECB prepared Convergence Reports
on Latvia, following the request of the national authorities.
Latviaadopted the euro on 1 January 2014.
3 Denmark and the United Kingdom have not expressed an intention
to adopt the euro and are therefore not covered in the
assessment.
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Member States' convergence process and its sustainability,
include inter alia thestrengthening of the excessive deficit
procedure by the 2011 reform of the Stabilityand Growth Pact and
new instruments in the area of surveillance of
macroeconomicimbalances. In particular, this report takes into
account the assessment of the 2014Convergence Programmes and the
findings under the Alert Mechanism Report of theMacroeconomic
Imbalances Procedure4.
Convergence criteria
The examination of the compatibility of national legislation,
including the statutes ofthe national central bank, with Article
130 and with the compliance duty underArticle 131 of the TFEU
encompasses an assessment of observance of theprohibition of
monetary financing (Article 123) and the prohibition of
privilegedaccess (Article 124); consistency with the ESCB's
objectives (Article 127(1)) andtasks (Article 127(2)) and other
aspects relating to the integration of the nationalcentral bank
into the ESCB at the moment of the euro adoption.
The price stability criterion is defined in the first indent of
Article 140(1) of theTFEU: “the achievement of a high degree of
price stability […] will be apparentfrom a rate of inflation which
is close to that of, at most, the three best performingMember
States in terms of price stability”.
Article 1 of the Protocol on the convergence criteria further
stipulates that “thecriterion on price stability […] shall mean
that a Member State has a priceperformance that is sustainable and
an average rate of inflation, observed over aperiod of one year
before the examination, that does not exceed by more than
1.5percentage points that of, at most, the three best-performing
Member States in termsof price stability. Inflation shall be
measured by means of the consumer price indexon a comparable basis,
taking into account differences in national definitions”5.
Therequirement of sustainability implies that the satisfactory
inflation performance mustessentially be attributable to the
behaviour of input costs and other factorsinfluencing price
developments in a structural manner, rather than the influence
oftemporary factors. Therefore, the convergence examination
includes an assessmentof the factors that have an impact on the
inflation outlook and is complemented by areference to the most
recent Commission services' forecast of inflation6. Related tothis,
the report also assesses whether the country is likely to meet the
reference valuein the months ahead.
The inflation reference value was calculated to be 1.7% in April
2014, with Latvia,Portugal and Ireland as the three
'best-performing Member States'7.
It is warranted to exclude from the 'best performers' countries
whose inflation ratescould not be seen as a meaningful benchmark
for other Member States8. Such
4 The Commission published its third Alert Mechanism Report
(AMR) in November 2013 and the conclusions of the corresponding
in-depth reviews in March 2014.
5 For the purpose of the criterion on price stability, inflation
is measured by the Harmonised Index of Consumer Prices (HICP)
defined inCouncil Regulation (EC) No 2494/95.
6 All forecasts for inflation and other variables in the current
report are from the Commission services' 2014 Spring Forecast.
TheCommission services' forecasts are based on a set of common
assumptions for external variables and on a no-policy change
assumptionwhile taking into consideration measures that are known
in sufficient detail.
7 The cut-off date for the data used in this report is 15 May
2014.8 The use of the term 'best performer in terms of price
stability' should be understood in the meaning of Article 140(1) of
the TFEU and is
not intended to represent a general qualitative judgement about
the economic performance of a Member State.
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outliers were in the past identified in the 2004, 2010 and 2013
ConvergenceReports9. At the current juncture, it is warranted to
identify Greece, Bulgaria andCyprus as outliers, as their inflation
rates deviated by a wide margin from the euroarea average and
including them would unduly affect the reference value and thus
thefairness of the criterion10. In case of Greece and Cyprus,
negative inflation mainlyreflected the severe adjustment needs and
exceptional situation of the economy. Incase of Bulgaria, it was
due to an unusually strong combination of disinflationaryfactors,
inter alia, a good harvest, administrative energy price reductions
anddeclining import prices. Against this background, Latvia,
Portugal and Ireland, theMember States with the next-lowest average
inflation rates, are used for thecalculation of the reference
value.
The convergence criterion dealing with public finances is
defined in the secondindent of Article 140(1) of the TFEU as “the
sustainability of the governmentfinancial position: this will be
apparent from having achieved a governmentbudgetary position
without a deficit that is excessive as determined in accordancewith
Article 126(6)”. Furthermore, Article 2 of the Protocol on the
convergencecriteria states that this criterion means that “at the
time of the examination theMember State is not the subject of a
Council decision under Article 126(6) of the saidTreaty that an
excessive deficit exists”. As part of an overall strengthening
ofeconomic governance in EMU, the secondary legislation related to
public financeswas enhanced in 2011, including the new regulations
amending the Stability andGrowth Pact11.
The TFEU refers to the exchange rate criterion in the third
indent of Article 140(1)as “the observance of the normal
fluctuation margins provided for by the exchange-rate mechanism of
the European Monetary System, for at least two years,
withoutdevaluing against the euro”.
Article 3 of the Protocol on the convergence criteria
stipulates: “The criterion onparticipation in the exchange rate
mechanism of the European Monetary System (…)shall mean that a
Member State has respected the normal fluctuation marginsprovided
for by the exchange-rate mechanism of the European Monetary
Systemwithout severe tensions for at least the last two years
before the examination. Inparticular, the Member State shall not
have devalued its currency’s bilateral centralrate against the euro
on its own initiative for the same period”12.
The relevant two-year period for assessing exchange rate
stability in this report is 16May 2012 to 15 May 2014. In its
assessment of the exchange rate stability criterion,the Commission
takes into account developments in auxiliary indicators such
asforeign reserve developments and short-term interest rates, as
well as the role of
9 Lithuania, Ireland and Greece, respectively.10 In April 2014,
the 12-month average inflation rate of Greece, Bulgaria and Cyprus
were respectively -1.2%, -0.8% and -0.4% and that of
the euro area 1.0%.11 A directive on minimum requirements for
national budgetary frameworks, two new regulations on macroeconomic
surveillance and
three regulations amending the Stability and Growth Pact (SGP)
entered into force on 13 December 2011 (one out of two
newregulations on macroeconomic surveillance and one out of three
regulations amending the SGP include new enforcement mechanismsfor
euro-area Member States). Besides the operationalisation of the
debt criterion in the Excessive Deficit Procedure, the
amendmentsintroduced a number of important novelties in the
Stability and Growth Pact, in particular an expenditure benchmark
to complement theassessment of progress towards the
country-specific medium-term budgetary objective.
12 In assessing compliance with the exchange rate criterion, the
Commission examines whether the exchange rate has remained close to
theERM II central rate, while reasons for an appreciation may be
taken into account, in accordance with the Common Statement
onAcceding Countries and ERM2 by the Informal ECOFIN Council,
Athens, 5 April 2003.
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policy measures, including foreign exchange interventions, and
internationalfinancial assistance wherever relevant, in maintaining
exchange rate stability.
The fourth indent of Article 140(1) of the TFEU requires “the
durability ofconvergence achieved by the Member State with a
derogation and of its participationin the exchange rate mechanism
being reflected in the
”. Article 4 of the Protocol on the convergence criteria further
stipulates that“the criterion on the convergence of interest rates
(…) shall mean that, observedover a period of one year before the
examination, a Member State has had anaverage nominal long-term
interest rate that does not exceed by more than 2percentage points
that of, at most, the three best-performing Member States in
termsof price stability. Interest rates shall be measured on the
basis of long-termgovernment bonds or comparable securities, taking
into account differences innational definitions”.
The interest rate reference value was calculated to be 6.2% in
April 201413.
Article 140(1) of the TFEU also requires an examination of other
factors relevant toeconomic integration and convergence. These
additional factors include financial andproduct market integration,
the development of the balance of payments on currentaccount and
the development of unit labour costs and other price indices. The
latterare covered within the assessment of price stability. The
additional factors areimportant indicators that the integration of
a Member State into the euro area wouldproceed without difficulties
and broadens the view on sustainability of convergence.
2. BULGARIA
In the light of its assessment on legal compatibility and on the
fulfilment of theconvergence criteria, and taking into account
additional relevant factors, theCommission considers that Bulgaria
does not fulfil the conditions for theadoption of the euro.
Legislation in Bulgaria – in particular the Law on the Bulgarian
National Bank – isnot fully compatible with the compliance duty
under Article 131 of the TFEU.Incompatibilities and imperfections
exist in the fields of central bank independence,the prohibition of
monetary financing and central bank integration into the ESCB atthe
time of euro adoption with regard to the tasks laid down in Article
127(2) of theTFEU and Article 3 of the ESCB/ECB Statute.
Bulgaria fulfils the criterion on price stability. In Bulgaria,
12-month averageinflation was above the reference value at the last
convergence assessment in 2012.The average inflation rate in
Bulgaria during the 12 months to April 2014 was -0.8%,well below
the reference value of 1.7%. It is projected to remain well below
thereference value in the months ahead.
Annual HICP inflation declined from its peak in September 2012,
turning negative inthe second half of 2013 and the first months of
2014. The fall in inflation has beenbroad-based, but largely driven
by declining import prices, decreases in
13 The reference value for April 2014 is calculated as the
simple average of the average long-term interest rates of Latvia
(3.3%), Portugal(5.8%) and Ireland (3.5%), plus two percentage
points.
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administratively set energy prices and a good agricultural
harvest. In April 2014,annual HICP inflation stood at -1.3%.
Inflation is expected to pick up slowly in the second half of
2014, with the fading ofbase effects from favourable energy and
food price developments. Accordingly, theCommission services' 2014
Spring Forecast projects annual average inflationat -0.8% in 2014
and 1.2% in 2015. The relatively low price level in Bulgaria (47%of
the euro-area average in 2012) suggests significant potential for
further price levelconvergence in the long term.
Bulgaria fulfils the criterion on public finances. Bulgaria is
not the subject of aCouncil Decision on the existence of an
excessive deficit. The general governmentdeficit fell from 2.0% of
GDP in 2011 to 0.8% in 2012, supported by higherrevenues-to-GDP.
The deficit-to-GDP ratio was 1.5% in 2013 and according to
theCommission services' 2014 Spring Forecast, it is projected to
increase to 1.9% ofGDP in 2014 and to decrease slightly to 1.8% in
2015, under a no-policy-changeassumption, supported by the economic
recovery. The gross public debt ratioremained low at 18.9% of GDP
in 2013 and it is projected to increase to 23.1% ofGDP in 2014 and
to abate to 22.7% of GDP in 2015.
-2
0
2
4
6
8
10
12
14
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Bulgaria Reference value
Bulgaria - Inflation criterion since 2008
5
10
15
20
25-5-4-3-2-10123
2008 2009 2010 2011 2012 2013 2014(*) 2015(*)
Government balance (lhs) Cyclically-adjusted balance (lhs) Gross
debt (rhs)
Bulgaria - Government budget balance and debt
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Bulgaria does not fulfil the exchange rate criterion. The
Bulgarian lev is notparticipating in ERM II. The BNB pursues its
primary objective of price stabilitythrough an exchange rate anchor
in the context of a Currency Board Arrangement(CBA). Bulgaria
introduced its CBA on 1 July 1997, pegging the Bulgarian lev to
theGerman mark and later the euro. Additional indicators, such as
developments inforeign exchange reserves and short-term interest
rates, suggest that investors' riskperception towards Bulgaria has
remained favourable. A sizeable official reservesbuffer continues
to underpin the resilience of the CBA. During the
two-yearassessment period, the Bulgarian lev remained fully stable
vis-à-vis the euro, in linewith the operation of the CBA.
Bulgaria fulfils the criterion on the convergence of long-term
interest rates. Theaverage long-term interest rate in Bulgaria in
the year to April 2014 was 3.5%, wellbelow the reference value of
6.2%. It was also below the reference value at the timeof the last
convergence assessment in 2012. It declined from above 5% in early
2012to around 3.5% by mid-2013. Yield spreads vis-à-vis the
euro-area long-termbenchmark bonds14 declined significantly in the
second half of 2012, as Bulgarianbond yields fell with the calming
of financial market tensions in the region. Thespread against the
German benchmark bond widened slightly to some 200 basispoints in
early 2014.
Additional factors have also been examined, including balance of
paymentsdevelopments and integration of labour, product and
financial markets. Bulgaria'sexternal balance recorded a
significant surplus in 2013. The trade balancedeteriorated slightly
from 2011 to 2013, but this was more than offset byimprovements in
the income account and current transfers. The Bulgarian economyis
well integrated to the euro area through trade and investment
linkages. On thebasis of selected indicators relating to the
business environment, Bulgaria performsworse than most euro-area
Member States. Bulgaria's financial sector is wellintegrated with
the EU financial sector, in particular through a high level of
foreignownership in its banking system. In the context of the
Macroeconomic ImbalanceProcedure, Bulgaria was subject to an
in-depth review, which found that Bulgariacontinues to experience
macroeconomic imbalances, which require monitoring andpolicy
action.
3. THECZECHREPUBLIC
In the light of its assessment on legal compatibility and on the
fulfilment of theconvergence criteria, and taking into account the
additional relevant factors, theCommission considers that the Czech
Republic does not fulfil the conditions forthe adoption of the
euro.
Legislation in the Czech Republic – in particular the Czech
National Council Act� � � � � � � � � � � – is not fully
compatible with the compliance duty under Article 131 of the
TFEU.Incompatibilities concern the independence of the central bank
and central bank
� � � � � � � � � � � � � � �
14 Countries' long-term interest spreads vis-à-vis the euro-area
long-term benchmark bonds (n.b. the German benchmark bond is used
as aproxy for the euro area) are computed using the monthly series
"EMU convergence criterion bond yields" published by Eurostat.
Theseries is also published by the ECB under the name "Harmonised
long-term interest rate for convergence assessment purposes".
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objectives and the ESCB tasks laid down in Article 127(2) of the
TFEU and Article 3� � � � � � � � � � � �
relating to the prohibition of monetary financing and the ESCB
tasks.
The Czech Republic fulfils the criterion on price stability. In
the Czech Republic,12-month average inflation was below the
reference value at the time of the lastconvergence assessment in
2012. The average inflation rate in the Czech Republicduring the 12
months to April 2014 was 0.9%, below the reference value of 1.7%.
Itis projected to fall well below the reference value in the months
ahead.
Annual HICP inflation in the Czech Republic increased above the
euro-area inflationin 2012, largely due to an increase in the lower
VAT rate while higher energy andfood prices in global commodity
markets were also passed through into consumerprices. Inflation
moderated significantly throughout 2013 as pressures stemmingfrom
energy prices gradually eased off and growth in prices of services
becamesubdued. Lack of demand pressures, reflecting the economic
downturn, alsocontributed to the moderate price growth. Annual HICP
inflation hovered close to0.3% in early 2014.
Inflation is projected to pick up in the second half of 2014 on
account of thesignificant weakening of the koruna in late 2013.
Stronger domestic demand is thenexpected to stoke up inflation in
2015. On this basis, the Commission services'Spring 2014 Forecast
projects annual HICP inflation to average 0.8% in 2014 and1.8% in
2015. The price level in the Czech Republic (about 71% of the
euro-areaaverage in 2012) suggests potential for price level
convergence in the long term.
If the Council decides to abrogate its excessive deficit
procedure, the CzechRepublic will fulfil the criterion on public
finances. The Czech Republic is atpresent the subject of a Council
Decision on the existence of an excessive deficit(Council Decision
of 2 December 2009)15. The Council recommended the CzechRepublic to
correct the excessive deficit by 2013. The general government
deficit inthe Czech Republic declined to 1.5% of GDP in 2013.
According to the Commissionservices' 2014 Spring Forecast, which is
based on a no-policy-change assumption,
15 Decision 2010/284/EU (OJ L 125, 21.5.2010, p. 36-37).
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the deficit-to-GDP ratio will amount to 1.9% in 2014 and 2.4% in
2015, whilegeneral government debt is expected to remain broadly
stable at 45.8% of GDP in2015.
In view of these developments and the Commission services' 2014
Spring Forecast,the Commission considers that the excessive deficit
has been corrected with acredible and sustainable reduction of the
budget deficit below 3% of GDP. TheCommission is therefore
recommending that the Council abrogate the decision on theexistence
of an excessive deficit for the Czech Republic.
The Czech Republic does not fulfil the exchange rate criterion.
The Czech korunais not participating in ERM II. The Czech Republic
operates a floating exchange rateregime, allowing for foreign
exchange market interventions by the central bank.From early 2010
until late 2013, the exchange rate of the Czech koruna against
theeuro remained broadly stable, predominantly trading between 24
and 26 CZK/EUR.
� � � � � � � � � � � � � �exchange market to weaken the koruna,
so that its exchange rate against the euro wasabove 27 CZK/EUR. As
a result, the koruna swiftly weakened from below 26CZK/EUR to above
27 CZK/EUR and then continued to trade close to 27.4CZK/EUR in
early 2014. During the two years before this assessment, the
korunadepreciated against the euro by almost 11%.
The Czech Republic fulfils the criterion on the convergence of
long-terminterest rates. The Czech 12-month average interest rate
was below the referencevalue at the time of the last convergence
assessment in 2012. The average long-terminterest rate in the Czech
Republic in the year to April 2014 was 2.2%, well belowthe
reference value of 6.2%. Following a protracted downward trend,
long-terminterest rates in the Czech Republic declined from above
5% in mid-2009 to below tobelow 2 % in late 2012. At the same time,
the spread against the German long-termbenchmark bond narrowed to
below 100 basis points. Long-term spreads remainedbroadly stable in
2013, oscillating around 50 basis points, as yields
increasedsomewhat in both the Czech Republic and Germany. The
spread against the Germanbenchmark bond widened to about 70 basis
points in early 2014.
Additional factors have also been examined, including balance of
paymentsdevelopments and integration of labour, product and
financial markets. The externalbalance of the Czech Republic
gradually improved from a deficit of above 3% of
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GDP in 2010 to a surplus of 0.5% of GDP in 2013, mainly as a
result of theincreased trade surplus. The Czech economy is highly
integrated into the euro areathrough trade and investment linkages.
On the basis of selected indicators relating tothe business
environment, the Czech Republic performs worse than most
euro-areaMember States. The Czech financial sector is highly
integrated into the EU financialsector, in particular through a
high degree of foreign ownership of financialintermediaries. In the
context of the Macroeconomic Imbalance Procedure, the CzechRepublic
has not been subject to an in-depth review.
4. CROATIA
In the light of its assessment on legal compatibility and on the
fulfilment of theconvergence criteria, and taking into account the
additional relevant factors, theCommission considers that Croatia
does not fulfil the conditions for theadoption of the euro.
Legislation in Croatia is fully compatible with the compliance
duty under Article131 of the TFEU.
Croatia fulfils the criterion on price stability. In Croatia,
the average inflation rateduring the 12 months to April 2014 was
1.1%, below the reference value of 1.7%. Itis expected to remain
below the reference value in the months ahead.
Annual HICP inflation has slowed down significantly during the
past 1½ years fromabove 4% in the second half of 2012 to around
zero in spring 2014. The decline ininflation has reflected lower
energy and food prices on global commodity markets,the fading of
the impact of earlier increases in administered prices,
anddisinflationary effects from the protracted recession. In April
2014, annual inflationstood at -0.1%.
Inflation is projected to remain subdued throughout 2014, in the
context of weakdomestic demand, unfavourable labour market
developments and high deleveragingneeds of the private and the
public sector. The Commission services' 2014 SpringForecast
projects annual HICP inflation to average 0.8% in 2014 and 1.2% in
2015.The price level in Croatia (about 69% of the euro-area average
in 2012) suggestspotential for further price level convergence in
the long-run.
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Croatia does not fulfil the criterion on public finances.
Croatia is at present thesubject of a Council Decision on the
existence of an excessive deficit (CouncilDecision of 28 January
2014), which the Council recommended to correct by 2016.The general
government deficit-to-GDP ratio reached 4.9% in 2013, slightly
downfrom 5% in 2012. The Commission services' 2014 Spring Forecast
projects thedeficit to decline to 3.8% of GDP in 2014 and 3.1% of
GDP in 2015. The generalgovernment debt-to-GDP ratio is projected
to increase throughout the forecasthorizon, from 67.1% in 2013 to
69.2% in 2015.
Croatia does not fulfil the exchange rate criterion. The
Croatian kuna is notparticipating in ERM II. Croatia operates a
tightly-managed floating exchange rateregime, allowing for foreign
exchange market intervention by the central bank.During the past
two years, the kuna has remained broadly stable against the euro,
itsanchor currency, fluctuating between 7.4 and 7.7 HRK/EUR. The
marginaldepreciation of the kuna against the euro in recent years
has reflected poor domesticeconomic developments and unfavourable
external conditions, while intra-yearvolatility has been related to
the seasonality of tourism revenues.
Croatia fulfils the criterion on the convergence of long-term
interest rates. Theaverage long-term interest rate in Croatia, as
reflected by the secondary market yield
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on a single benchmark bond with a residual maturity of about 6
years, was 4.8% inthe year to April 2014, below the reference value
of 6.2%. It declined from close to7% in mid-2012 to around 4.6% in
autumn 2013, before increasing slightly in early2014. In the
absence of a kuna-denominated sovereign bond with longer
maturity,yield developments should be interpreted with great
caution. The yield spread againstthe German benchmark bond with
6-year maturity stood at around 370 basis points inApril 2014.
Additional factors have also been examined, including balance of
paymentsdevelopments and integration of labour, product and
financial markets. Croatia’sexternal balance improved considerably
in recent years, turning into a surplus of1.2% of GDP in 2013,
mainly on account of import compression. The Croatianeconomy is
integrated into the euro area through trade and investment
linkages,although links to global supply chains have remained weak.
On the basis of selectedindicators relating to the business
environment, Croatia performs worse than mosteuro-area Member
States. The financial sector is highly integrated into the euro
areathrough foreign ownership of domestic banks. Croatia was
subject to an in-depthreview in the context of the Macroeconomic
Imbalance Procedure, which concludedthat the country is
experiencing excessive macroeconomic imbalances, which
requirespecific monitoring and strong policy action. In particular,
policy action is requiredin view of the vulnerabilities arising
from sizeable external liabilities, decliningexport performance,
highly leveraged firms and fast-increasing general
governmentdebt.
5. LITHUANIA
In the light of its assessment on legal compatibility and on the
fulfilment of theconvergence criteria, and taking into account the
additional relevant factors, theCommission considers that Lithuania
fulfils the conditions for the adoption ofthe euro.
Legislation in Lithuania is fully compatible with the compliance
duty underArticle 131 of the TFEU.
Lithuania fulfils the criterion on price stability. In
Lithuania, 12-month averageinflation was above the reference value
at the last convergence assessment in 2012.The average inflation
rate in Lithuania during the 12 months to April 2014 was 0.6%,well
below the reference value of 1.7%. It is projected to remain below
the referencevalue in the months ahead.
After a peak of annual HICP inflation at 10% in 2008, the
economic recession andsignificant nominal wage adjustment led to
moderating inflation in 2009 and 2010.Inflation accelerated again
to 4.1% on average in 2011 on the back of highercommodity prices
and economic recovery. It has thereafter broadly followed
adeclining trend, induced by lower inflation of energy and
processed food prices,which was also supported by continuing wage
restraint in the economy. Inflationmoderated to 3.2% in 2012 and
1.2% in 2013.
Annual HICP inflation is expected to be 1.0% on average in 2014
according to theCommission services' 2014 Spring Forecast,
reflecting mainly favourable food and
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energy price developments. It is projected to pick up in 2015 to
1.8%, in the contextof improving domestic demand. The relatively
low price level in Lithuania (around63% of the euro-area average in
2012) suggests potential for further price levelconvergence in the
long term.
Sustainable convergence implies that the respect of the
reference value is the resultof underlying fundamentals rather than
temporary factors. An analysis of underlyingfundamentals and the
fact that the reference value has been met by a comfortablemargin
support a positive assessment on the fulfilment of the price
stability criterion.
Longer-term inflation prospects will hinge in particular on
wages growing in linewith productivity. As Lithuania is still a
catching-up economy, wages are expected togrow faster than in most
advanced euro-area members. However, risks to pricestability from
catching-up related price adjustment are limited by the
recentlydemonstrated flexibility of the labour market and
wage-setting mechanisms whichshould ensure that labour costs are
aligned with productivity. They are also containedby the country's
significant progress in implementing the EU services directive
andlow market entry costs, which keep competitive pressures high,
as witnessed byrecent new entries in the retail market. A shortage
of well-qualified labour in themedium term could drive up wages
relative to productivity. Addressing theremaining bottlenecks will
be important in limiting any tightening of the labourmarket.
Diversification of supplies and more competitive markets would also
supportfavourable price developments in the energy sector.
Lithuania fulfils the criterion on public finances. Lithuania is
not the subject of aCouncil Decision on the existence of an
excessive deficit. The general governmentdeficit declined from 5.5%
of GDP in 2011 to 3.2% in 2012, mainly due toexpenditure restraint.
The deficit-to-GDP ratio was 2.1% in 2013 and according tothe
Commission services' 2014 Spring Forecast it is projected to remain
at 2.1% ofGDP in 2014 and decline to 1.6% in 2015, under a
no-policy-change assumption.The general government debt is expected
to increase from 39.4% of GDP in 2013 to41.4% of GDP in 2015.
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Lithuania has put in place a number of fiscal governance
measures, which shouldsupport the longer-term commitment to sound
public finances. In March 2012,Lithuania signed the Treaty on
Stability, Coordination and Governance in EMU(TSCG), and the
respective ratification law was approved by Parliament inSeptember
2012. This implies an additional commitment to conduct
stability-oriented and sustainable fiscal policies. A draft
legislative package including aconstitutional law on the
sustainability of general government sector finances inaccordance
with the Fiscal Compact has been approved by the government
mid-Apriland will be voted by Parliament. The National Audit Office
would be charged withthe functions of an independent Fiscal
Council. The transposition of the TSCG intonational law would
furthermore support existing legislation, in particular the Law
onFiscal Discipline, adopted in 2007 and applied since 2013. It is
based on provisionsof the Stability and Growth Pact, links an
expenditure ceiling to revenues and sets asan objective a balanced
budget in the medium term as well as long-termsustainability.
However, it lacks a binding medium-term expenditure framework.
In addition, amendments of the National Budget Law to implement
CouncilDirective 2011/85/EU on requirements for budgetary
frameworks of the MemberStates targeting a balanced or surplus
position over the cycle came into full force forthe 2014 budget
planning and execution process. These amendments increase
thegovernment's accountability for the implementation of the
multiannual fiscal targets;however, the effect of the new law
remains to be assessed.
Lithuania fulfils the exchange rate criterion. Lithuania entered
ERM II on 28 June2004 and has been participating in the mechanism
for almost ten years at the time ofthe adoption of this report.
Upon ERM II entry, the authorities unilaterallycommitted to
maintain the prevailing currency board within the mechanism.
Thecurrency board remains well supported by foreign exchange
reserves. Short-terminterest differentials vis-à-vis the euro area
have narrowed to very low levels. Duringthe two-year assessment
period, the litas did not deviate from the central rate, and itdid
not experience tensions.
Lithuania fulfils the criterion on the convergence of long-term
interest rates.The average long-term interest rate in the year to
April 2014 was 3.6%, well belowthe reference value of 6.2%. The
average long-term interest rate in Lithuania hadbeen below the
reference value at the time of the last convergence assessment
in2012 (5.2%). It gradually declined further to below 4% in 2013,
reflecting improved
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investor sentiment towards the country supported by increased
sovereign creditratings as well as a relatively low domestic
inflation. Although the long-term litas-denominated government bond
market is relatively shallow, the government issueddebt securities
with original maturity of up to 10 years in 2012 and 2013.
Additional factors have also been examined, including balance of
paymentsdevelopments and the integration of labour, product and
financial markets. Afterrecording a substantial surplus in 2009,
Lithuania's external balance (i.e. thecombined current and capital
account) deteriorated somewhat in 2010, reaching adeficit of 1.2%
of GDP in 2011, but it posted surpluses again in 2012 and 2013.
Theincome account moved to surplus in 2009, reflecting mainly
loan-loss provisionsmade by foreign-owned banks, and returned to a
deficit from 2010 onwards, whenforeign-owned banks regained
profitability. Current transfers and the capital accounthave
consistently recorded significant surpluses, reflecting positive
net inflows fromEU funds and migrant remittances. Net FDI inflows
recovered after a collapse in2009 and peaked at 3.2% of GDP in
2011, however, they subsided to 0.7% in 2012and recovered only
somewhat in 2013. A significant decline in the
real-effectiveexchange rate in 2009-2011, in particular when
deflated by ULC, gave a strong boostto Lithuania's cost
competitiveness, and Lithuania substantially improved its
exportperformance. Following a moderate upward trend, the
ULC-deflated REERappreciated by about 6% and HICP-deflated by about
3% between mid-2012 andApril 2014.
The Lithuanian economy is well integrated into the euro area
through both trade andinvestment linkages. The labour market has
demonstrated substantial flexibility,although structural
unemployment is high. On the basis of selected indicators
relatingto the business environment, Lithuania performs broadly in
line with the average ofeuro-area Member States. Lithuania’s
financial sector is well integrated into the EUfinancial system as
confirmed by the high share of foreign-owned banks.
Financialsupervision has been strengthened substantially in the
recent years. Cooperation withhome supervisors has been further
enhanced.
6. HUNGARY
In the light of its assessment on legal compatibility and on the
fulfilment of theconvergence criteria, and taking into account the
additional relevant factors, theCommission considers that Hungary
does not fulfil the conditions for theadoption of the euro.
Legislation in Hungary - in particular the Act on the Magyar
Nemzeti Bank (MNB)- is not fully compatible with the compliance
duty under Article 131 of the TFEU.Incompatibilities notably
concern the independence of the MNB, the prohibition ofmonetary
financing and central bank integration into the ESCB at the time of
euroadoption with regard to the ESCB tasks laid down in Article
127(2) of the TFEU andArticle 3 of the ESCB/ECB Statute. In
addition, the Law on the MNB also containsan incompatibility and
further imperfections relating to MNB integration into theESCB.
Hungary fulfils the criterion on price stability. In Hungary,
12-month averageinflation was above the reference value at the last
convergence assessment in 2012.
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The average inflation rate in Hungary during the 12 months to
April 2014 was 1.0%,below the reference value of 1.7%. It is
projected to remain below the referencevalue in the months
ahead.
Annual inflation peaked in September 2012 before falling sharply
in January 2013,with the fading of the effect of earlier indirect
tax hikes and the start of a series ofutility price reductions. A
decline in market energy and food prices also
supporteddisinflation, as did weak domestic demand and historically
low inflationexpectations. On the other hand, excise duty increases
and some other governmentmeasures had a substantial upward effect
on prices. In April 2014, annual HICPinflation stood at -0.2%.
Inflation is projected to increase to 1.0% in 2014 and to 2.8%
in 2015 according tothe Commission services' 2014 Spring Forecast,
mainly due to the fading-away ofutility price cuts, less favourable
commodity price developments and the gradualclosing of the output
gap. The relatively low price level in Hungary (about 59% ofthe
euro-area average in 2012) suggests potential for further price
level convergencein the long term.
Hungary fulfils the criterion on public finances. Hungary is not
the subject of aCouncil Decision on the existence of an excessive
deficit. The general governmentbalance, after recording a surplus
of 4.3% of GDP in 2011 due to a significant one-off operation,
turned into a deficit of 2.1% of GDP in 2012. The deficit-to-GDP
ratioreached 2.2% in 2013 and according to the Commission services'
2014 SpringForecast, it will amount to 2.9% in 2014 and to 2.8% in
2015 under a no-policy-change assumption. General government debt
is projected to increase marginallyfrom 79.2% of GDP in 2013 to
79.5% of GDP in 2015.
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Hungary does not fulfil the exchange rate criterion. The
Hungarian forint is notparticipating in ERM II. Hungary operates a
floating exchange rate regime, allowingfor foreign exchange market
interventions by the central bank. The forint exchangerate against
the euro has been volatile in recent years. The forint was broadly
stableagainst the euro in the second half of 2012, but depreciated
by about 6% in early2013. Supported by increased investor interest
in EU financial assets andimprovements in the macroeconomic
situation, the forint strengthened in May andremained in the range
of 290-300 HUF/EUR for the rest of 2013, except for a fewdays ahead
of the Fed's September meeting and in late December. The forint
hasremained at levels over 300 HUF/EUR in the first months of 2014,
with temporarypressures linked mainly to expectations about US
monetary policy, the continuationof the domestic monetary easing,
as well as the political crisis in Ukraine.
Hungary fulfils the criterion on the convergence of long-term
interest rates. Theaverage long-term interest rate in the year to
April 2014 was 5.8%, below thereference value of 6.2%. It was above
the reference value at the time of the lastconvergence assessment
of Hungary in 2012. The monthly average long-term interestrate
declined from its peak of 9.5% in early 2012 to close to 5% by May
2013. Long-term interest rates rose during the summer of 2013 and
in early 2014, but havefluctuated generally in a close range to
their annual average. Long-term spreads vis-à-vis the German
benchmark bond stood at some 410 basis points in April 2014.
Additional factors have also been examined, including balance of
paymentsdevelopments and integration of labour, product and
financial markets. Hungary'sexternal surplus has gradually
increased each year since 2009. Since 2011, theimprovement has
mainly reflected higher goods trade surpluses and better
absorptionof EU funds. Net FDI inflows remain relatively small. The
balance-of-paymentsassistance granted to Hungary by the EU and the
IMF in autumn 2008 expired in late2010. Although Hungary asked for
precautionary balance of payments assistance inNovember 2011, as
the country's financial market situation had stabilised,
thisrequest was withdrawn in January 2014. The Hungarian economy is
highlyintegrated to the euro area through trade and investment
linkages. On the basis ofselected indicators relating to the
business environment, Hungary performs worsethan most euro-area
Member States. Hungary's financial sector is well integrated
intothe EU financial system. In the context of the Macroeconomic
Imbalance Procedure,Hungary was subject to an in-depth review,
which found that Hungary continues to
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experience macroeconomic imbalances, which require monitoring
and decisivepolicy action.
7. POLAND
In the light of its assessment on legal compatibility and on the
fulfilment of theconvergence criteria, and taking into account the
additional relevant factors, theCommission considers that Poland
does not fulfil the conditions for the adoptionof the euro.
Legislation in Poland - in particular the Act on the Narodowy
Bank Polski (NBP)and the Constitution of the Republic of Poland -
is not fully compatible with thecompliance duty under Article 131
of the TFEU. Incompatibilities concern theindependence of the
central bank, the prohibition of monetary financing and centralbank
integration into the ESCB at the time of euro adoption. In
addition, the Act onthe NBP also contains some imperfections
relating to central bank independence andthe NBP integration into
the ESCB at the time of euro adoption.
Poland fulfils the criterion on price stability. In Poland,
12-month averageinflation was above the reference value at the time
of the last convergenceassessment in 2012. The average inflation
rate in Poland during the 12 months toApril 2014 was 0.6%, well
below the reference value of 1.7%. It is expected toremain below
the reference value in the months ahead.
Annual HICP inflation declined rapidly from above 4% in the
first half of 2012 tobelow 1% in the second quarter of 2013, due to
favourable commodity pricedevelopments as well as an abrupt
decrease in the prices of telecommunicationservices. It remained
below 1% during the second half of 2013 and in early 2014, toa
large extent reflecting low inflationary pressures in global
markets and a relativelystable exchange rate.
Inflation is expected to increase only gradually to 1.1% in 2014
and 1.9% in 2015according to the Commission services' 2014 Spring
Forecast, as the output gap isestimated to remain negative. The
relatively low price level in Poland (close to 56%of the euro-area
average in 2012) suggests potential for further price
levelconvergence in the long term.
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Poland does not fulfil the criterion on public finances. Poland
is at present thesubject of a Council Decision on the existence of
an excessive deficit (CouncilDecision of 7 July 2009)16. The
Council recommended Poland to correct theexcessive deficit by 2012.
On 21 June 2013, the Council concluded that Poland hadtaken
effective action but adverse economic events with major
implications on publicfinances had occurred, and issued revised
recommendation under Article 126(7)TFEU, in which it recommended
that Poland should put an end to the excessivedeficit situation by
2014. The Council established the deadline of 1 October 2013
forPoland to take effective action. On 10 December 2013, the
Council established inaccordance with Article 126(8) TFEU that
Poland had not taken effective action. Itadopted a new
recommendation under Art.126 (7) TFEU, according to which
Polandshould bring an end to the excessive deficit situation by
2015 in a credible andsustainable manner.
According to the Commission services' 2014 Spring Forecast the
general governmentbudget balance is projected to increase from a
deficit of 4.3% of GDP in 2013 to asurplus of 5.7% of GDP in 2014,
largely due to a large, one-off asset transfer fromthe second
pension pillar. In 2015, the general government budget balance
isexpected to turn negative again, posting a deficit of 2.9% of GDP
under ESA95. Thegeneral government debt-to-GDP ratio is forecast to
fall from 57% in 2013 to 49.2%in 2014, mainly as a result of the
transfer of pension fund assets, before increasing to50% in
2015.
16 Decision 2009/589/EC (OJ L 202, 4.8.2009, p. 46).
0
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3
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Poland Reference value
Poland - Inflation criterion since 2008
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Poland does not fulfil the exchange rate criterion. The Polish
zloty is notparticipating in ERM II. Poland operates a floating
exchange rates regime, allowingfor foreign exchange market
interventions by the central bank. Following a sharpdepreciation in
the second half of 2011 – which induced foreign exchange
marketinterventions by the NBP – the zloty's exchange rate against
the euro partiallyrecovered in early 2012. The zloty thereafter
broadly stabilised and predominantlytraded in the range of 4.1-4.3
PLN/EUR until early 2014. Compared to April 2012,the exchange rate
of the zloty against the euro was thus basically unchanged in
April2014.
Poland fulfils the criterion on the convergence of long-term
interest rates. ThePolish 12-month average long-term interest rate
was exactly at the reference value atthe time of the last
convergence assessment in 2012. The average long-term interestrate
in the year to April 2014 was 4.2%, well below the reference value
of 6.2%.Long-term interest rates declined from above 6% in early
2011 to below 4% by end-2012, reflecting improved investor
sentiment towards the country as well as asubstantial fall in
domestic inflation. Long-term interest rates increased again
duringthe second half of 2013 as risk appetite in global financial
markets dwindled. As aresult, long-term interest rate spreads
vis-à-vis the German benchmark bond hoveredaround 270 basis points
in early 2014.
Additional factors have also been examined, including balance of
paymentsdevelopments and integration of labour, product and
financial markets. Poland’sexternal balance improved considerably
in recent years, turning into a surplus of 1%of GDP in 2013, driven
by a strengthening trade balance. The Polish economy is
wellintegrated into the euro area through both trade and investment
linkages. On the basisof selected indicators relating to the
business environment, Poland performs worsethan most euro-area
Member States. Poland's financial sector is well integrated intothe
EU financial system as confirmed by the substantial share of
foreign-ownedbanks. In the context of the Macroeconomic Imbalance
Procedure, Poland has notbeen subject to an in-depth review.
3035404550556065-8
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8. ROMANIA
In the light of its assessment on legal compatibility and on the
fulfilment of theconvergence criteria, and taking into account the
additional relevant factors, theCommission considers that Romania
does not fulfil the conditions for theadoption of the euro.
Legislation in Romania – in particular Law No. 312 on the
Statute of the Bank ofRomania (the BNR Law) – is not fully
compatible with the compliance duty underArticle 131 of the TFEU.
Incompatibilities concern the independence of the centralbank, the
prohibition of monetary financing and central bank integration into
theESCB at the time of euro adoption. In addition, the BNR Law
contains imperfectionsrelating to central bank independence and to
central bank integration in the ESCB atthe time of euro adoption
with regard to the BNR's objectives and the ESCB taskslaid down in
Article 127(2) of the TFEU and Article 3 of the ESCB/ECB.
Romania does not fulfil the criterion on price stability. In
Romania, 12-monthaverage inflation was above the reference value at
the last convergence assessment in2012. The average inflation rate
in Romania during the 12 months to April 2014 was2.1%, above the
reference value of 1.7%. It is projected to remain above
thereference value in the months ahead.
Romania has recorded volatile and elevated inflation rates in
recent years. Annualinflation peaked at 8.5% in May 2011 following
an increase in the standard VAT ratein mid-2010 and a rise in food
prices. It fell significantly during the second half of2011 and in
early 2012, supported by a good harvest and lower energy
commodityprices but picked up again in the second half of 2012 and
beginning of 2013 due torising food and energy prices. Annual
average inflation moderated to just above 3%in 2012 and 2013.
Inflation is expected to be lower in 2014, supported by lower
food prices and to pickup in 2015 as domestic demand is set to
recover. The Commission services' 2014Spring Forecast projects
annual HICP inflation to average 2.5% in 2014 and 3.3% in2015. The
relatively low price level in Romania (around 54% of the
euro-areaaverage in 2012) suggests significant potential for
further price level convergence inthe long term.
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Romania fulfils the criterion on public finances. Romania is not
the subject of aCouncil Decision on the existence of an excessive
deficit. The general governmentdeficit declined from 5.5% of GDP in
2011 to 3.0% in 2012, mainly due toexpenditure restraint but also
involving revenue measures. The deficit-to-GDP ratioturned out at
2.3% in 2013 and according to the Commission services' 2014
SpringForecast, it is projected to decrease further to 2.2% of GDP
in 2014 and to 1.9% in2015, under a no-policy-change assumption.
The general government debt isexpected to increase from 38.4% of
GDP in 2013 to 40.1% of GDP in 2015.
Romania does not fulfil the exchange rate criterion. The
Romanian leu is notparticipating in ERM II. Romania operates a
floating exchange rate regime, allowingfor foreign exchange market
interventions by the central bank. After a strongdepreciation
during the global financial crisis in late 2008 and early 2009, the
leubroadly stabilised from 2009 until late 2011, supported by the
EU-IMF financialassistance programme. The leu's exchange rate
against the euro came underdepreciation pressures during temporary
bouts of global risk aversion, especially inmid-2012. It firmed
somewhat in late 2012 and in early 2013, as foreign interest
inRON-denominated assets increased. The leu's exchange rate against
the eurotemporarily depreciated in mid-2013 and early 2014,
reflecting heightened globalrisk aversion which induced operations
by the BNR in the interbank as well as in the
0
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10
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Romania Reference value
Romania - Inflation criterion since 2008
0
10
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foreign exchange market. During the two years before this
assessment, the leudepreciated against the euro by 1.9%.
Romania fulfils the criterion on the convergence of long-term
interest rates.Average long-term interest rates in Romania were
above the reference value at thelast convergence assessment in
2012. The average long-term interest rate in Romaniain the year to
April 2014 was 5.3%, below the reference value of 6.2%.
Long-terminterest rates in Romania remained at just above 7% for
most of the period 2010-2011, before falling in 2012. They declined
to around 5.5% by the end of 2012 andfloated around 5.3% for most
of 2013, reflecting improved investor sentimenttowards the country.
As a result, long-term interest rate spreads vis-à-vis the
Germanbenchmark bond declined from above 500 basis points in late
2012 to about 380basis points in April 2014.
Additional factors have also been examined, including balance of
paymentsdevelopments and the integration of labour, product and
financial markets.Romania's external balance (i.e. the combined
current and capital account) improvedmarkedly during the global
crisis. Romania's external deficit narrowed to 3% of GDPin 2012 and
the external balance shifted into surplus in 2013. The narrowing of
theexternal shortfall reflected, in particular, a lower merchandise
trade deficit. Romaniahas been a recipient of international
financial assistance since 2009. The first two-year joint EU-IMF
financial assistance programme was followed by a further twojoint
EU-IMF programmes, granted in 2011 and 2013. Unlike the first
programme,both subsequent programmes have been treated as
precautionary, and no funding hasbeen requested so far. External
financing pressures eased further in 2012-2013 amidan improvement
in the external balance and recovery in global risk appetite.
TheRomanian economy is well integrated into the euro area through
both trade andinvestment linkages. On the basis of selected
indicators relating to the businessenvironment, Romania performs
worse than most euro-area Member States.Romania's financial sector
is well integrated into the EU financial system asconfirmed by the
substantial share of foreign-owned banks. In the context of
theMacroeconomic Imbalance Procedure, Romania has not been subject
to an in-depthreview.
9. SWEDEN
In the light of its assessment on legal compatibility and on the
fulfilment of theconvergence criteria, and taking into account the
additional relevant factors, theCommission considers that Sweden
does not fulfil the conditions for theadoption of the euro.
Legislation in Sweden - in particular the Sveriges Riksbank Act,
the Instrument ofGovernment and the Law on the Exchange Rate Policy
- is not fully compatiblewith the compliance duty under Article 131
of the TFEU. Incompatibilities andimperfections exist in the fields
of independence of the central bank, prohibition ofmonetary
financing and central bank integration into the ESCB at the time of
euroadoption.
Sweden fulfils the criterion on price stability. In Sweden,
12-month averageinflation was below the reference value at the time
of the last convergence
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assessment in 2012. The average inflation rate in Sweden during
the 12 months toApril 2014 was 0.3%, well below the reference value
of 1.7%. It is projected toremain well below the reference value in
the months ahead.
In recent years, HICP inflation in Sweden fell from an average
of 1.4% in 2011 to0.9% in 2012, before declining further to 0.4% in
2013. The decline over the last twoyears was driven by the
strengthening of the krona and sluggish internal and
externaldemand, and was broad-based across various goods and
services. In April 2014,annual HICP inflation stood at 0.3%.
On the back of a gradual pick-up in growth, inflation is likely
to increase onlymoderately in the course of 2014. No particular
upward pressure is foreseen fromany HICP component and wage
developments are projected to remain moderate. TheCommission
services' 2014 Spring Forecast projects annual average inflation at
0.5%in 2014 and 1.5% in 2015. The level of consumer prices in
Sweden relative to theeuro area gradually increased since Sweden
joined the EU in 1995, to 126% in 2012.
Sweden fulfils the criterion on public finances. Sweden is not
the subject of aCouncil Decision on the existence of an excessive
deficit. The general governmentbalance turned into a deficit of
0.6% of GDP in 2012 which widened to 1.1% in2013. This mainly
reflected lacklustre growth and a number of government measuresto
support the economy. According to the Commission services' 2014
SpringForecast, the government deficit is projected to reach 1.8%
of GDP in 2014, beforedeclining to 0.8% in 2015 under a
no-policy-change assumption. The gross publicdebt ratio stood at
40.6% of GDP in 2013 and is projected to increase further in2014,
reaching 41.6% of GDP, before falling back to 40.4% in 2015.
0
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Sweden - Inflation criterion since 2008
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Sweden does not fulfil the exchange rate criterion. The Swedish
krona is notparticipating in ERM II. Sweden operates a floating
exchange rate regime, allowingfor foreign exchange market
interventions by the central bank. Following the strongdepreciation
of the krona against the euro at the onset of the financial crisis
in 2008,the krona appreciated by some 35% between March 2009 and
August 2012, reachinga twelve-year high in August 2012. While this
appreciation was also a correction ofthe krona's previous
weakening, safe-haven flows in the context of the
euro-areasovereign debt crisis significantly contributed to it.
During the two years before thisassessment, the krona depreciated
against the euro by some 2%.
Sweden fulfils the criterion on the convergence of long-term
interest rates. Theaverage long-term interest rate in Sweden in the
year to April 2014 was 2.2%, wellbelow the reference value of 6.2%.
The Swedish 12-month average interest rate hadalso been markedly
below the reference value at the last convergence assessment
in2012. Having declined from above 4% in 2008, it bottomed out at
some 1.6%between October 2012 and May 2013 and has been increasing
since then. Yieldspreads vis-à-vis German long-term government
bonds widened between end-2012and autumn 2013, as Swedish bond
yields increased owing to a partial reversal ofsafe-haven flows
from the euro area. The spread against the German benchmarkbond
stood at some 60 basis points in April 2014.
Additional factors have also been examined, including balance of
paymentsdevelopments and integration of labour, product and
financial markets. The surpluson Sweden's external balance has been
on a declining trend since 2007, falling fromabove 9% of GDP in
2007 to 6.6% in 2013, which is partly explained by a
structuraldecrease in Sweden's merchandise trade surplus. Sweden's
economy is highlyintegrated into the euro area through trade and
investment linkages. On the basis ofselected indicators relating to
the business environment, Sweden performs better thanmost euro-area
Member States. Sweden's financial sector is well integrated into
theEU financial sector, especially through inter-linkages in the
Nordic-Baltic financialcluster. In the context of the Macroeconomic
Imbalance Procedure, Sweden wassubject to an in-depth review in
2014, which found that Sweden continues toexperience macroeconomic
imbalances, which require monitoring and policy action.
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1.1. ROLE OF THE REPORT
The euro was introduced on 1 January 1999 byeleven Member
States. The decision (17) by theCouncil (meeting in the composition
of the Headsof State or Government) on 3 May 1998 inBrussels on the
eleven Member States deemedready to participate in the single
currency had, inaccordance with the Treaty (Article 121(4)TEC)
(18), been prepared by the Ecofin Council ona recommendation from
the Commission. Thedecision was based on the two ConvergenceReports
made by the Commission (19) and theEuropean Monetary Institute
(EMI),respectively (20). These reports, prepared inaccordance with
Article 121(1) TEC (21),examined whether the Member States
satisfied theconvergence criteria and met the
legalrequirements.
Since then, Greece (2001), Slovenia (2007),Cyprus and Malta
(2008), Slovakia (2009), Estonia(2011) and Latvia (2014) have
adopted the euro.
Those Member States which are assessed as notfulfilling the
necessary conditions for the adoptionof the euro are referred to as
"Member States witha derogation". Article 140 of the Treaty lays
downprovisions and procedures for examining thesituation of Member
States with a derogation (Box1.1). At least once every two years,
or at therequest of a Member State with a derogation, theCommission
and the European Central Bank(ECB) prepare Convergence Reports for
suchMember States. Denmark and the United Kingdomnegotiated opt-out
arrangements before theadoption of the Maastricht Treaty (22) and
do not
(17) OJ L 139, 11.5.1998, pp. 30-35(18) The numbering of Treaty
articles cited in this report
corresponds to the one of the Treaty on the Functioning ofthe
European Union (TFEU) except when explicitlymentioned. Article
121(4) TEC does no longer exist in theTFEU, as it refers to the
first countries deemed ready toadopt the euro on 1 January
1999.
(19) Report on progress towards convergence andrecommendation
with a view to the transition to the thirdstage of economic and
monetary union, COM(1998)1999final, 25 March 1998.
(20) European Monetary Institute, Convergence Report,
March1998.
(21) The content of this article is now included in Article
140(1)TFEU.
(22) Protocol (No 16) on certain provisions relating toDenmark,
Protocol (No 15) on certain provisions relating
participate in the third stage of EMU. Until theseMember States
indicate that they wish toparticipate in the third stage and adopt
the euro,they are not the subject of an assessment as towhether
they fulfil the necessary conditions.
In 2012, the Commission and the ECB adoptedtheir latest regular
Convergence Reports (23). Atthat time, none of the Member States
assessed wasdeemed to meet the necessary conditions foradopting the
euro.
On 5 March 2013, Latvia submitted a request for aconvergence
assessment. Following theConvergence Report 2013 on Latvia and on
thebasis of a proposal by the Commission, the EcofinCouncil decided
in July 2013 that Latvia fulfilledthe necessary conditions for
adopting the euro asof 1 January 2014 (24).
In 2014, two years will have elapsed since the lastregular
reports were prepared. Denmark and theUnited Kingdom have not
expressed a wish toenter the third stage of EMU. Therefore,
thisconvergence assessment covers Bulgaria, theCzech Republic,
Croatia, Lithuania, Hungary,Poland, Romania and Sweden. This
CommissionStaff Working Document is a Technical Annex tothe
Convergence Report 2014 and includes adetailed assessment of the
progress withconvergence.
The financial and economic crisis, along with therecent
euro-area sovereign debt crisis, has exposedgaps in the current
economic governance system ofthe Economic and Monetary Union (EMU)
andshowed that its existing instruments need to beused more
comprehensively. With the aim ofensuring a sustainable functioning
of EMU, anoverall strengthening of economic governance inthe Union
has been undertaken. Accordingly, thisCommission Staff Working
Document makesreferences where appropriate to procedures thathelp
to strengthen the assessment of each Member
to the United Kingdom of Great Britain and NorthernIreland.
(23) European Commission, Convergence Report 2012,COM(2012) 257
final, 12 May 2010; European CentralBank, Convergence Report 2012,
May 2012.
(24) Council Decision of 9 July 2013 (OJ L 195, 18.7.2013,
p.24–26).
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States' convergence process and its sustainability.In
particular, it incorporates references to thestrengthened
surveillance of macroeconomicimbalances (see sub-section
1.2.6.).
The remainder of the first chapter presents themethodology used
for the application of theassessment criteria. Chapters 2 to 10
examine, on acountry-by-country basis, fulfilment of theconvergence
criteria and other requirements in theorder in which they appear in
Article 140(1) (seeBox 1.1). The cut-off date for the statistical
data
included in this Convergence Report was 15 May2014.
1.2. APPLICATION OF THE CRITERIA
In accordance with Article 140(1) of the Treaty,the Convergence
Reports shall examine thecompatibility of national legislation with
Articles130 and 131 of the Treaty and the Statute of theEuropean
System of Central Banks (ESCB) and ofthe European Central Bank. The
reports shall also
Article 140 of the Treaty
"1. At least once every two years, or at the request of a Member
State with a derogation, the Commissionand the European Central
Bank shall report to the Council on the progress made by the Member
States witha derogation in fulfilling their obligations regarding
the achievement of economic and monetary union.These reports shall
include an examination of the compatibility between the national
legislation of each ofthese Member States, including the statutes
of its national central bank, and Articles 130 and 131 and
theStatute of the ESCB and of the ECB. The reports shall also
examine the achievement of a high degree ofsustainable convergence
by reference to the fulfilment by each Member State of the
following criteria:
— the achievement of a high degree of price stability; this will
be apparent from a rate of inflation which isclose to that of, at
most, the three best performing Member States in terms of price
stability,
— the sustainability of the government financial position; this
will be apparent from having achieved agovernment budgetary
position without a deficit that is excessive as determined in
accordance with Article126(6),
— the observance of the normal fluctuation margins provided for
by the exchange-rate mechanism of theEuropean Monetary System, for
at least two years, without devaluing against the euro,
— the durability of convergence achieved by the Member State
with a derogation and of its participation inthe exchange-rate
mechanism being reflected in the long-term interest-rate
levels.
The four criteria mentioned in this paragraph and the relevant
periods over which they are to be respectedare developed further in
a Protocol annexed to the Treaties. The reports of the Commission
and theEuropean Central Bank shall also take account of the results
of the integration of markets, the situation anddevelopment of the
balances of payments on current account and an examination of the
development of unitlabour costs and other price indices.
2. After consulting the European Parliament and after discussion
in the European Council, the Council shall,on a proposal from the
Commission, decide which Member States with a derogation fulfil the
necessaryconditions on the basis of the criteria set out in
paragraph 1, and abrogate the derogations of the MemberStates
concerned.
The Council shall act having received a recommendation of a
qualified majority of those among its membersrepresenting Member
States whose currency is the euro. These members shall act within
six months of theCouncil receiving the Commission's proposal.
The qualified majority of the said members, as referred to in
the second subparagraph, shall be defined inaccordance with Article
238(3)(a).
3. If it is decided, in accordance with the procedure set out in
paragraph 2, to abrogate a derogation, theCouncil shall, acting
with the unanimity of the Member States whose currency is the euro
and the MemberState concerned, on a proposal from the Commission
and after consulting the European Central Bank,irrevocably fix the
rate at which the euro shall be substituted for the currency of the
Member Stateconcerned, and take the other measures necessary for
the introduction of the euro as the single currency inthe Member
State concerned."
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examine the achievement of a high degree ofsustainable
convergence by reference to thefulfilment of the four convergence
criteria dealingwith price stability, public finances, exchange
ratestability and long term interest rates as well assome
additional factors. The four convergencecriteria are developed
further in a Protocolannexed to the Treaty (Protocol No 13 on
theconvergence criteria).
In accordance with Article 140(1) of the Treaty,the legal
examination includes an assessment ofcompatibility between a Member
State’slegislation, including the statute of its nationalcentral
bank, and Article 130 and 131 of theTreaty. This assessment mainly
covers three areas.
First, the independence of the national centralbank and of the
members of its decision-making bodies, as laid down in Article
130,must be assessed. This assessment covers allissues linked to a
national central bank'sinstitutional financial independence and to
thepersonal independence of the members of itsdecision-making
bodies.
Second, in accordance with Articles 123 and124 of the Treaty,
the compliance of thenational legislation is verified against
theprohibition of monetary financing andprivileged access. The
prohibition of monetaryfinancing is laid down in Article 123(1) of
theTreaty, which prohibits overdraft facilities orany other type of
credit facility with the ECBor the central banks of Member States
in favourof Union institutions, bodies, offices oragencies, central
governments, regional, localor other public authorities, other
bodiesgoverned by public law, or public undertakingsof Member
States; and the purchase directlyfrom these public sector entities
by the ECB orcentral banks of debt instruments. As regardsthe
prohibition on privileged access, the centralbanks, as public
authorities, may not takemeasures granting privileged access by
thepublic sector to financial institutions if suchmeasures are not
based on prudentialconsiderations.
Third, the integration of the national centralbank into the ESCB
has to be examined, inorder to ensure that at the latest by the
momentof euro adoption, the objectives of the national
central bank are compatible with the objectivesof the ESCB as
formulated in Article 127 of theTreaty. The national provisions on
the tasks ofthe national central bank are assessed againstthe
relevant rules of the Treaty and theESCB/ECB Statute.
The price stability criterion is defined in the firstindent of
Article 140(1) of the Treaty: “theachievement of a high degree of
price stability […]will be apparent from a rate of inflation which
isclose to that of,