The Convergence Reports examine whether the Member States satisfy the necessary conditions to adopt the single currency. The EC Treaty requires the Commission and the European Central Bank to issue these reports at least once every two years or at the request of an EU Member State which would like to join the euro area.
The conditions which the Member States must meet, and which the Reports therefore examine, are:
The Treaty on the Functioning of the European Union (TFEU Article 140) states that at least once every two years, or at the request of a Member State with a derogation (i.e. not participating in the euro area), the Commission and the ECB must report to the Council on the progress made with respect to convergence.
On the basis of its assessment, the Commission submits a proposal to the ECOFIN Council which – having consulted the European Parliament, and after discussion among the Heads of State or Government – decides whether the country fulfills the necessary conditions and may adopt the euro. If the decision is favorable, the ECOFIN Council takes the necessary legal steps and – based on a Commission proposal, having consulted the ECB – adopts the conversion rate at which the national currency will be replaced by the euro, which thereby becomes irrevocably fixed.
EU Member States currently outside the euro area
At present, there are 10 EU Member States that do not participate in the euro area - Bulgaria, Croatia, the Czech Republic, Denmark, Lithuania, Hungary, Poland, Romania, Sweden and the United Kingdom.
Denmark and the United Kingdom have negotiated opt-out arrangements and will therefore not be the subject of a convergence assessment until they request it.
Convergence reports 1996 - 2014
The Convergence Reports have been produced since 1996. The 1998 reports by the Commission and the European Monetary Institute (the forerunner of the European Central Bank) formed the basis for the Council decision on the introduction of the euro in the initial eleven Member States.
In 2000, the Commission and the ECB prepared reports on Sweden and Greece (the latter having submitted a request for a convergence assessment) concluding that Greece fulfilled the necessary conditions for adoption of the single currency. The Council then decided on that basis that the euro would be introduced in Greece in January 2001.
In 2002, the convergence assessment covered only Sweden and concluded that Sweden did not fulfil the conditions.
In October 2004, the ten countries that joined the European Union on 1 May 2004 were assessed for the first time. Although the maximum two-year period referred to by the Treaty had not yet elapsed for these countries in 2004, the obligatory re-assessment of Sweden was taken as an opportunity to analyse also the state of convergence in the new Member States. The report concluded that none of the 11 assessed countries at that stage fulfilled the necessary conditions for the adoption of the single currency.
In 2006, there were two sets of convergence assessments. Lithuania's and Slovenia's state of readiness was examined in convergence reports issued in May 2006 at their own request. While Slovenia was deemed to fulfil all the convergence criteria and ready to adopt the euro in January 2007, the report on Lithuania suggested that there should be no change in its status as a Member State with a derogation.
The then remaining nine countries (the Czech Republic, Estonia, Cyprus, Latvia, Hungary, Malta, Poland, Slovakia and Sweden) were assessed in December 2006. Although the report showed progress with convergence in many countries, none of them was deemed to meet the necessary conditions for adopting the single currency.
Aiming to adopt the euro in 2008, Cyprus and Malta submitted requests for re-examination in spring 2007. On the basis of convergence reports issued by the Commission and the ECB in May 2007, the Council concluded that both Cyprus and Malta fulfilled the necessary conditions for adoption of the single currency. Consequently, the Council decided that the euro would be introduced in the two countries on 1 January 2008.
In 2008, the convergence report adopted on 7 May examined progress towards convergence in remaining ten Member States with a derogation - Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia and Sweden. The report concluded that Slovakia met the conditions to join the euro area in January 2009.
In 2010, the Commission concluded on 12 May that Estonia met the requirements for joining the euro, as the result of determined and credible policy efforts and recommend Estonia's membership of the euro zone from 1 January 2011.
In 2012, the Commission concluded on 30 May that that none of the countries examined (Bulgaria, the Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania and Sweden) fulfilled all conditions for adopting the euro.
In 2013, the Commission concluded on 5 June that Latvia fulfilled all conditions for adopting the euro.
The next regular convergence assessment, covering all Member States with a derogation, is scheduled for June 2014.