Despite warnings from several quarters, four EU newcomers are rushing headlong towards adopting the European single currency, the euro, with the earliest possible entry being 2006.
Four new member states -- Estonia, Lithuania, Slovenia and Cyprus -- have indicated that they intend to take the first steps towards eventual adoption of the euro by the end of this year, leading to final adoption in late 2006. This first step is an application to join the so-called Exchange Rate Mechanism II (ERM II). Inside this mechanism, a member state's currency must remain stable against the euro for a period of two years. After participation in ERM II, other economic criteria are assessed, such as whether a country can control their deficits and inflation. If these tests are passed, a country is permitted to join the euro. An Estonian source told the EUobserver that Estonia was "ready to join as soon as possible," although stressed no deadline had been set. Other new member states have curbed their initial enthusiasm for joining the single currency. Poland had hoped to join in 2006, but has moved this back to 2009. A Czech diplomat confirmed that the Czech Republic hoped to join "in 2007 at the earliest." Some of the larger newcomers will have to undertake radical reform programs to reduce their budget deficits prior to joining the euro. ( EUobserver.com)