1. Economic and Monetary Union

2. Convergence across European Union
One of the main goals of the new member states is finding an optimum mix of policies that would ensure high growth rates and the alignment to the general standards imposed by the European Union.
The next important step is to join the Monetary and Economic Union and finally adopting euro.
This embodies a series of targets that must be accomplished in order to ensure a smooth transition towards achieving sustainable convergence.

3. Convergence across European Union
The nominal convergence criteria a state should fulfill before adopting euro are detailed by the Treaty of Maastricht.
The main objective stipulated by the Treaty of Maastricht: ” Promoting a sustainable economic and social progress, throughout an area without internal borders, through economic and social cohesion and by establishing a Economic and Monetary Union that has as final stage the adoption of the common currency, namely the Euro.

4. The Maastricht Treaty – Principles
The transition towards a monetary union is gradual for each country
Not all member states have to become members of the European Union at the same time

5. Adopting the euro
Establishing a fixed date for the accession to the euro zone, is determined exclusive by the states and their capacity of fulfilling the accession criteria.
The degree of fulfillment of these criteria may be evaluated from the economic perspective and of the structural similarities that exists between that economies and the European Union.
In addition to all these issues is particularly important to assess the ability of absorption of different types of shocks by these economies.

6. Adopting the euro
The new changes of the economic and political framework of the euro zone, but also of the mechanisms of intervention of the supranational institutions on different markets may generate the introduction of new criteria for the states involved.
The current situation from the euro zone was strongly influenced by the financial crisis impact and also by the sovereign debt crisis from the European markets.

7. A budget deficit less than 3% of GDP.
Euro challenges – the formal framework of adopting the common currency established by the Maastricht Treaty
Inflation rate must be within 1.5 percentage points of the average rate of the three states with the lowest inflation.
The long term interest rate must be within 2 percentage points of the average rate of the three states with the lowest inflation rates.
The public debt must be either already below 60% of GDP or heading towards this level.
A budget deficit less than 3% of GDP.
The national currency must not be devalued for two years.

8. Adopting the euro
The reduced performances of the CEE countries during the recent crises were considered a warning sign for the need of reconfiguration of the economic growth models of these economies. Becker et all (2010) identifies as generator elements for this context the extremely high degree of financial integration as well as the high dependence of net capital flows.
The impact of the recent financial crisis was warning sign of the need to reconsider the criteria of entering euro zone. Darvas (2010) propose as a manner of solving these vicissitudes a recalculation of these indicators according to the recent developments across euro zone and extending the period for the evaluation of the degree of fulfillment of these criteria by the states.

9. Real convergence criteria
This set of criteria’s was introduced for CEEC countries as additional preconditions for EMU participation.
The concept of real convergence is characterized by complexity and it’s related to the process of reducing the gap between the aspirant’s countries and EU.
Real convergence criteria considered:
degree of openness (expressed as (Imports + Exports/GDP);
share of bilateral trade with EU countries in total foreign trade;
economy structures (expressed by the share that important sectors have in consolidation of GDP mainly agriculture, service and industry);
GDP/capita

10. Nominal and real convergence
Establishing a correlation between real and nominal criteria is considered to be one of the most important landmarks of the euro issue.
Reason: the actions related to these two types of convergence target two different aspects
Real convergence: complex phenomenon related to the process of reducing the gap between economies;
Nominal convergence: convergence implies the harmonization of some basic macroeconomic indicators like inflation rate, long-term interest rate, exchange rate, budget deficit and public debt.

11. Institutional structure of EMU
Is formed by the European Central Bank and the central banks of the member states that togheter constitute what we call the European System of Central Banks.
The Euro-system is formed by European Central Bank and the central banks of the states that already adopted euro.
Main objectives of European System of Central Banks:
Maintaining price stability;
Defining monetary policy;
Assuring the stability of the financial system.