The economic integration of new countries into the European Union has proceeded at an impressive pace, but none is ready yet to adopt the euro, European Central Bank (ECB) Vice President Lucas Papademos said today.
By 2007, the ECB looks forward to assessing whether Lithuania, Slovenia and Estonia can join the euro zone, he said.
But first these countries must complete the minimum requirement of two years in the Exchange Rate Mechanism (ERM-2), where their currencies are linked to the euro, and demonstrate a stable relationship, he told a European Parliament committee.
Aligning their economies with the low inflation and interest rates in the euro is also necessary, Mr Papademos said, citing the standard procedures for euro adoption.
Lithuania, Estonia and Slovenia joined the ERM-2 last year. The other seven EU newcomers, mostly former communist countries in Eastern Europe plus Cyprus and Malta, are waiting a little longer before linking to the euro currency.
In presenting the ECB's annual report, Mr Papademos noted that the economies of the 10 EU newcomers have developed closer links with western Europe.
Their share of exports and imports in the euro area has doubled in the past decade and direct investment from the euro area into these countries has increased significantly.
But he repeated the ECB's policy stance of encouraging new EU states to complete a large part of their economic reforms before they lock themselves to the euro exchange rate within the ERM-2. The ECB believes this would be less disruptive to their economies.
Some countries, such as Poland, have said they would prefer early euro adoption before economic convergence and budget reforms are complete.