Deutscher Bundestag Drucksache 1730 · 2020. 5. 14. · Deutscher Bundestag Drucksache 18/1730 18....

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Deutscher Bundestag Drucksache 18/1730 18. Wahlperiode 10.06.2014 Unterrichtung durch 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 YRUJHOHJW GHU GDV OLWDXLVFKH %HLWULWWVHUVXFKHQ EHIUZRUWHW XQG GHQ %HLWULWW HPS¿HKOW 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 ,QÀDWLRQVUDWH VRZLH GHU ODQJIULVWLJH =LQVVDW] LQ GHU 5HIHUHQ]SHULRGH XQWHUKDOE GHU 5HIHUHQ]ZHUWH OLHJHQ GLH 7UDJIlKLJNHLW GHU 6WDDWV¿QDQ]HQ HUUHLFKW LVW :HFKVHONXUV- 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.

Transcript of Deutscher Bundestag Drucksache 1730 · 2020. 5. 14. · Deutscher Bundestag Drucksache 18/1730 18....

  • 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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    Anlage 1

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    Anlage 2

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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.

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    Bulgaria Reference value

    Bulgaria - Inflation criterion since 2008

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    2008 2009 2010 2011 2012 2013 2014(*) 2015(*)

    Government balance (lhs) Cyclically-adjusted balance (lhs) Gross debt (rhs)

    Bulgaria - Government budget balance and debt

  • Drucksache 18/1730 – 28 – Deutscher Bundestag – 18. Wahlperiode

    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".

  • Deutscher Bundestag – 18. Wahlperiode – 29 – Drucksache 18/1730

    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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    Czech Republic - Inflation criterion since 2008

  • Drucksache 18/1730 – 30 – Deutscher Bundestag – 18. Wahlperiode

    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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    Government balance (lhs) Cyclically-adjusted balance (lhs) Gross debt (rhs)

    Czech Rep. - Government budget balance and debt

  • Deutscher Bundestag – 18. Wahlperiode – 31 – Drucksache 18/1730

    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.

  • Drucksache 18/1730 – 32 – Deutscher Bundestag – 18. Wahlperiode

    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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    Croatia - Inflation criterion since 2008

    303540455055606570-8

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    Croatia - Government budget balance and debt

  • Deutscher Bundestag – 18. Wahlperiode – 33 – Drucksache 18/1730

    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

  • Drucksache 18/1730 – 34 – Deutscher Bundestag – 18. Wahlperiode

    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 - Inflation criterion since 2008

  • Deutscher Bundestag – 18. Wahlperiode – 35 – Drucksache 18/1730

    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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    Lithuania - Government budget balance and debt

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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.

  • Deutscher Bundestag – 18. Wahlperiode – 37 – Drucksache 18/1730

    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 - Inflation criterion since 2008

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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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    Hungary - Government budget balance and debt

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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).

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  • Deutscher Bundestag – 18. Wahlperiode – 41 – Drucksache 18/1730

    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

    -6-4-20246

    2008 2009 2010 2011 2012 2013 2014(*) 2015(*)

    Government balance (lhs) Cyclically-adjusted balance (lhs) Gross debt (rhs)

    Poland - Government budget balance and debt

  • Drucksache 18/1730 – 42 – Deutscher Bundestag – 18. Wahlperiode

    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.

  • Deutscher Bundestag – 18. Wahlperiode – 43 – Drucksache 18/1730

    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

    2

    4

    6

    8

    10

    Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

    Romania Reference value

    Romania - Inflation criterion since 2008

    0

    10

    20

    30

    40

    50-10

    -8

    -6

    -4

    -2

    02008 2009 2010 2011 2012 2013 2014(*) 2015(*)

    Government balance (lhs) Cyclically-adjusted balance (lhs) Gross debt (rhs)

    Romania - Government budget balance and debt

  • Drucksache 18/1730 – 44 – Deutscher Bundestag – 18. Wahlperiode

    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

  • Deutscher Bundestag – 18. Wahlperiode – 45 – Drucksache 18/1730

    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

    1

    2

    3

    4

    5

    Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

    Sweden Reference value

    Sweden - Inflation criterion since 2008

  • Drucksache 18/1730 – 46 – Deutscher Bundestag – 18. Wahlperiode

    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.

    25

    30

    35

    40

    45

    50-2

    -1

    0

    1

    2

    32008 2009 2010 2011 2012 2013 2014(*) 2015(*)

    Government balance (lhs) Cyclically-adjusted balance (lhs) Gross debt (rhs)

    Sweden - Government budget balance and debt

  • Deutscher Bundestag – 18. Wahlperiode – 47 – Drucksache 18/1730

  • Deutscher Bundestag – 18. Wahlperiode – 49 – Drucksache 18/1730

    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).

  • Drucksache 18/1730 – 50 – Deutscher Bundestag – 18. Wahlperiode

    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."

  • Deutscher Bundestag – 18. Wahlperiode – 51 – Drucksache 18/1730

    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,