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Europe

Commissioner Cautious About Euro Prospects for New Members

European Economics and Monetary Affairs Commissioner Pedro Solbes used a keynote speech on Monday in Prague to warn accession countries that rushing to join the euro may not be the "optimum strategy" for them.

European Commission Economics and Monetary Affairs Commissioner Pedro Solbes used a keynote speech on Monday in Prague to warn accession countries that rushing to join the euro may not be the "optimum strategy" for them. Speaking at a conference organized by the International Monetary Fund, Solbes said: "Entry soon after accession is clearly an option. It may, however, not necessarily be an optimum strategy, especially if inflation has not yet been brought down sufficiently or if fiscal policy imbalances hamper macroeconomic stability." Future member states are bound by the terms of the accession treaties to join the euro, but they must first fulfil certain economic criteria. The three main conditions required are: having a budget deficit - tax receipts minus public spending - below three percent of gross domestic product (GDP), having a public debt below 60 percent of GDP and making sure that its currency does not fluctuate by more than 15 percent against the euro for two years. ( EUobserver.com)