The accession of ten new members to the European Union on the 1 May 2004 is not the end of the enlargement process: joining the euro area will be the next step for these countries. To do this, they will have to fulfil the criteria set out in the Maastricht Treaty, in particular the membership of the ERM II for at least two years. This requirement, however, leads to uncertainties, as economic convergence is not consistent with exchange rate stability for all countries. The success of ERM membership will also depend on the central parities chosen, the sustainability of current account financing and on containing the uncertainties which could affect the stability of expectations. Monetary enlargement may therefore be very progressive, concerning the "small countries" first, which presently have fixed exchange rates, and only later affecting the “large” new Member States.
international integration; euro area; european enlargement; exchange rate; monetary block; EMS
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