Agreed in Maastricht by the EU Member States in 1991 as part of the preparations for introduction of the euro, the convergence criteria are formally defined as a set of macroeconomic indicators which measure:

  • Price stability, to show inflation is controlled;
  • Soundness and sustainability of public finances, through limits on government borrowing and national debt to avoid excessive deficit;
  • Exchange-rate stability, through participation in the Exchange Rate Mechanism (ERM II) for at least two years without strong deviations from the ERM II central rate;
  • Long-term interest rates, to assess the durability of the convergence achieved by fulfilling the other criteria

The exchange-rate stability criterion is chosen to demonstrate that a Member State can manage its economy without recourse to excessive currency fluctuations, which mimics the conditions when the Member State joins the euro area and its control of monetary policy passes to the European Central Bank (ECB). It also provides an indication of the appropriate conversion rate that should be applied when the Member State qualifies and its currency is irrevocably fixed.

The five convergence criteria.

What is measured:

Price stability

Sound public finances

Sustainable public finances

Durability of convergence

Exchange rate stability

How it is measured:

Consumer price inflation rate

Government deficit as % of GDP

Government debt as % of GDP

Long-term interest rate

Deviation from a central rate

Convergence criteria:

Not more than 1.5 percentage points above the rate of the three best performing Member States

Reference value: not more than 3%

Reference value: not more than 60%

Not more than 2 percentage points above the rate of the three best performing Member States in terms of price stability

Participation in ERM II for at least 2 years without severe tensions

Who decides if the convergence criteria are met?

According to the Treaty, at least once every two years, or at the request of a Member State with a derogation, the Commission and the European Central Bank assess the progress made by the euro-area candidate countries and publish their conclusions in respective convergence reports.