to be reached by those nations ascending into the EMU (Princeton Economics, 1998). The Maastricht Convergence Criteria is an essential element of the EMU structure, as it sets five minimum economics requirements, which must be met in order to ensure membership (JP Morgan, 2001). An ascending country’s inflation must be no higher than 1.5% above the average for the three EU members with lowest rates during the previous year, indicating price stability must exists within an economy (Harris, 1999:85). A prospective EMU member state should also experience long run interest rates no higher than 2% above the three EU members with the lowest rates during the previous year (Heller, 1997). The exchange rates of each economy must have also been in the normal band (ie. + or – 2.25%) of the ERM for 2 years without devaluating (Antwelleer, 2001). Those considering imminent membership should also display fiscal prudence or rather the economy should not experience a budget deficit, which exceeds 3% of its GDP (Harris, 1999: 85). Finally, it is essential that national debt does not exceed 60% of GDP (JP Morgan, 2001). These strict economic standards ensure that all countries operating under the single currency could be brought to the same position of the business cycle. If all member nations are experiencing similar economic conditions, it is possible for the ESCB to prescribe uniform monetary and discretionary fiscal policy (Urken, 1997). The final agreement which of consequence to the development of the EMU, is the establishment of the Stability and Growth Pact (Harris, 1999:85). This arrangement was initiated in 1996 at the Dublin Summit of the European Council, establishing a set of rules relating to currency and budgetary disciplines for countries within ‘Euroland’. Essentially, this policy pact decrees that all EMU members must maintain the Maastricht Criteria and defines possible enforcement mechanisms (Salmon, 2000:23-26...
