Vier nieuwe lidstaten willen sprinten naar de euro (en)

EUOBSERVER / BRUSSELS - 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.

Rowing back

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 programmes to reduce their budget deficits prior to joining the euro.

The Czech economy labours under a deficit of 12.9 percent of GDP (the EU's maximum limit is three percent). Similarly, Hungary has a deficit of nearly six percent and Poland's is four percent.

These deficits will have to be reduced to below three percent before the country concerned can entertain any hope of joining the club.

But all ten recent additions to the EU are legally bound to join the euro eventually.

Slow down

And several sources, such as the European Central Bank (ECB) and the renowned currency speculator George Soros have recently warned that these countries are best advised not to rush into the euro, due to the risk of currency attacks.

But despite the warnings, it now looks as if citizens from the high-flying accession countries will have euros in their pockets before some of the former EU 15.

The UK appears to have ruled out euro entry until at least 2008 and Sweden's recent rejection of the euro in a referendum also appears to rule out the euro there. Denmark has not indicated that it wishes to join the euro since a 2000 referendum rejected the currency.