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European Union; Lithuania: Euro Zone Membership on January 1, 2015

(Dec. 18, 2014) Lithuania, after a long and arduous process, has been found by the European Commission and the European Central Bank to meet the required criteria and will join the euro zone on January 1, 2015; as of that date it will also adopt the euro as its currency. With the addition of Lithuania, there will be 19 euro zone members. (January 1, 2015 Is €-Day for Lithuania, Delegation of the European Union to the United States website (last visited on Dec. 17, 2014).)

All 28 European Union Member States are eligible to join the euro zone, but the United Kingdom and Denmark have opted out of it. EU Members that aspire to join the euro zone must meet the economic and legal convergence criteria; that is, their national central banks and pertinent monetary policies must be compatible with the EU rules. (Adopting the Euro, European Commission: Economic and Financial Affairs website (last updated July 23, 2014).)

The economic convergence criteria that every candidate EU Member State must meet are:

1. Price stability, with the inflation rate in the applicant EU Member no higher than 1.5 percentage points above the previous year’s rate for the three EU countries with the lowest inflation;
2. Budget deficit below 3% of Gross Domestic Product (GDP);
3. National debt not exceeding 60% of GDP;
4. Long-term interest rates of not more than two percentage points above the previous year’s rate in the three EU countries with the lowest interest rates; and
5. Exchange rate stability, with the national currency exchange rate being within the authorized fluctuation margins for two consecutive years. (Convergence Criteria, European Central Bank website (last visited Dec. 17, 2014).)

The European Commission and the European Central Bank may assess the progress of a candidate EU Member in meeting the criteria to join the euro zone. The next candidate EU Member slated to join the euro zone, on January 1, 2019, is Romania. (Who Can Join and When? (last updated July 28, 2014), European Commission: Economic and Financial Affairs website.)