Economic And Monetary Union Of The European Union
The Economic and Monetary Union (EMU) is an umbrella term for the group of policies aimed at converging the economies of all members of the European Union at three stages. Both the 17 eurozone states and the 10 non-euro states are EMU members. A Member State however needs to comply and be a part of the "third EMU stage", before being able to adopt the euro currency; and as such the "third EMU stage" has also become largely synonymous with the eurozone.
All Member States of the European Union, except Denmark and the United Kingdom, have committed themselves by treaty to join the "third EMU stage". The Copenhagen criteria is the current set of conditions of entry for new states wanting to join the EU. It contains the requirements that need to be fulfilled and the time framework within which this must be done, in order for a country to join the monetary union. An important element of this, is a participation for minimum two years in the European Exchange Rate Mechanism ("ERM II"), in which candidate currencies demonstrate economic convergence by maintaining limited deviation from their target rate against the euro.
Seventeen member states of the European Union, including, most recently, Estonia, have entered the "third EMU stage" and have adopted the euro as their currency. Denmark, Latvia and Lithuania are the current participants in the Exchange Rate Mechanism (ERM II). Denmark and United Kingdom has received a special opt out from the EU Treaty, allowing for a permanent membership of ERM II, without being required to enter into the "third EMU stage". Latvia and Lithuania have yet to comply with all convergence criteria to proceed into the third stage. In regards of the remaining 6 non-euro Member States (Sweden, Poland, Czech Republic, Hungary, Romania and Bulgaria), they are committed by treaty to enter the third stage upon the time of complying with all convergence criteria; of which the last one (ERM II membership) however is something the Member State can choose not to apply for, if they do not want to adapt the euro. The 10 non-euro EU Member States will continue to use their own local and historic currencies.
Read more about Economic And Monetary Union Of The European Union: History, Criticism
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