ne and bring into convergence their economic performances. However the Maastricht treay adopts and economists approach who call for convergence first and the locking of exchange rates and acommon currency second. It envisages a stage-by-stage transition and emphasizes the need to achieve convergence before the final monetary act is accomplished.The Maastricht Treaty included both monetary and fiscal convergence criteria. We will start with monetary policy. Firstly in the year prior to examination an inflation rate of no more than 1.5 percentage points above the average of the three EC states with the lowest prices. The 15 members were to be assesd on 1/1/1998 by the European Commision and produce a European Convergence report which would asses each country’s eligibility according to the critereia, the judges being the European Monetary Institute (EMI) and the European Council. Inflation was clearly a good choice for a convergence criteria as it is essential to proper allocation of resources and economic growth. Empiriacla evidence suggests that economies with low inflation have higher economic growth. (R. Barrow, Bank of England Quarttely Bulletiin, 1998)...
