Maastricht criteria
These are five criteria that determine whether an EU country is ready to adopt the euro. They relate to:
- Price stability: The inflation rate should be no more than 1.5 percentage points above the rate for the three EU countries with the lowest inflation over the previous year;
- Budget deficit: This must generally be below 3% of gross domestic product (GDP);
- Debt: The national debt should not exceed 60% of GDP, but a country with a higher level of debt can still adopt the euro provided its debt level are falling steadily;
- Interest rates: The long-term rate should be no more than two percentage points above the rate in the three EU countries with the lowest inflation over the previous year;
- Exchange rate stability: The national currency’s exchange rate should have stayed within certain pre-set margins of fluctuation for two years.
These criteria were laid down in the Maastricht Treaty hence their name.
Conclusion
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References and Further Reading
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Author: international
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