The committee adopted the own-initiative\nreport drawn up by Werner Langen (EPP-ED, DE) on the enlargement of\nthe euro zone. The report pointed out that premature accession to\nthe euro zone might lead to unexpected developments in the economic\nconvergence process, such as undervalued or overvalued exchange\nrates and difficulties in achieving balanced payment accounts, and\nmight therefore render economic adjustment more difficult. It\nalso warned that the long-term stability of the euro zone should\nalso be assessed in terms of its capacity to absorb new entrants,\nand stressed that this implies that the enlargement of the\neuro zone must not undermine the required strengthening of economic\ngovernance within the zone.
\nIn the light of earlier problems, MEPs\nstressed that the judgments on whether a particular country meets\nthe inflation and interest rate criteria should be based on data\nprovided by the European Central Bank. However, they said that the\ninflation criterion, which is based on the inflation rates of the\nthree best-performing Member States, should be clarified, since it\nwas defined before the creation of the euro zone, with its single\ncurrency and unified monetary policy. The report said that it\nwas important to take into account the so-called Balassa-Samuelson\neffect (the view that fast-growing economies catching up with\nlarger economies will inevitably have higher inflation rates during\nthis transition) when considering the inflation criterion for\nemerging Member States.
\nMEPs called for Member States joining the euro\nto pay particular attention to consumer protection during the\nchangeover phase, with mandatory dual pricing for a sufficiently\nlong period of time and publicity campaigns encouraging citizens to\nshop around to avoid unjustified price increases.
\n\n
The European Parliament adopted a resolution based on\nthe own-initiative report by Werner Langen (EPP-ED, DE) on\nthe enlargement of the euro zone. It pointed out that the rate of\neconomic growth in the euro zone is currently at 1.8%, while that\nof the EU as a whole is 2% per year.
\nGeneral preconditions for the future enlargement of\nthe euro zone: Parliament recalled that all Member States with a\nderogation need to fulfil the Maastricht criteria before they can\njoin the euro zone, and that the requirements of the stability and\ngrowth pact apply to all Member States. It was convinced that an\nexamination of Member States\" preparedness to adopt the euro should\nbe built on the same definitions and principles as set out in past\nconvergence reports, so as to guarantee continuity and the equal\ntreatment of all Member States. It strongly opposed special\nprovisions concerning the fulfilment of the Maastricht criteria.\nMember States applying to join the euro zone (applicants for\naccession) must ensure full transparency in their policy decisions\n- such as the setting of conversion rates and entry target dates -\ntaken before and during membership of the ERM II.
\nThe technical preconditions for enlargement of the\neuro zone: Parliament asked\napplicants for accession to pay particular attention to consumer\nprotection during the changeover phase. It asked them also to\nimplement legislation requiring mandatory dual-pricing displays for\na sufficiently long duration and to establish effective procedures\nfor protecting consumers against unjustified price increases during\nthe changeover phase or longer. There must be clear public\ncampaigns which point out that the only weapon against unjustified\nprice increases is consumer power to choose their suppliers freely.\nSpecial attention should be paid to price setting in public or\nprivate monopoly situations and by public authorities. Parliament\ninvited them to put into place for a period of at least two years\nan observatory responsible for publishing data on the evolution of\nabout ten particularly significant consumer prices.
\nSpecial requirements for applicants for\naccession: Parliament pointed out\nthat a premature accession to the euro zone could lead to\nunexpected developments in the economic convergence process.\nEconomic convergence has not progressed far enough to allow rapid\naccession in some of the applicants for accession, as demonstrated\nby high inflation rates and excessive fiscal deficits observed in\nsome of them. Parliament recognised that several Member States have\nbuilt a solid base for the speedy introduction of the euro by\nensuring long-term fiscal sustainability. All criteria must be\nwholly fulfilled before adopting the euro. Parliament pointed out\nthat not all seven members of the ERM II without an opt-out clause\nhave reached the conditions for accession.
\nIt welcomed Slovenia as a new member of the euro zone\nbut regretted the negative recommendation issued to Lithuania and\nasked for a clear and comprehensive explanation of the basis of the\ncalculation undertaken in order to apply the inflation criteria.\nParliament pointed out that the inflation criterion requires an\ninflation rate that does not exceed, by more than 1,5%, that of the\nthree best-performing Member States as regards price stability,\nwith consumer prices of the previous 12 months being the basis for\nestablishing the average, on the basis of data provided by the\nCommission in cooperation with the ECB. It was concerned about the\nfact that two definitions of price stability are being used, one by\nthe ECB in its monetary policy (inflation below but close to 2%)\nand another in its convergence reports (the lowest possible\ninflation, excluding deflation). Parliament pointed out that the\nTreaty makes no such differentiation. These two interpretations of\nthe term price stability, which is specified in the Treaty, are\nmisleading and may have negative effects on the market and its\nparticipants in all Member States.
\nParliament pointed out that both the definition of the\nthree best-performing Member States in terms of price stability as\nwell as the method of calculating the reference value need to be\nclarified to reflect the fact that there are now twelve Member\nStates in the monetary union, using a single currency, which is\nsubject to a common monetary policy, and that the differentials in\ntheir individual inflation performance reflect structural factors\nrather than differences in macro-economic policy positions.\nHowever, it was important to take into account the so-called\nBalassa-Samuelson effect with respect to the inflation criteria for\nnew Member States.
\nFinally, Parliament strongly urged the Commission,\nfollowing the first two decisions on assessments of convergence\nprogrammes from new Member States towards the enlargement of the\neuro zone in the near future, to establish regular cooperation with\napplicants for accession in order to identify which economic policy\ninstruments best serve to improve inflation-related performance\nwithout prejudicing economic growth.
\nThe committee adopted the own-initiative\nreport drawn up by Werner Langen (EPP-ED, DE) on the enlargement of\nthe euro zone. The report pointed out that premature accession to\nthe euro zone might lead to unexpected developments in the economic\nconvergence process, such as undervalued or overvalued exchange\nrates and difficulties in achieving balanced payment accounts, and\nmight therefore render economic adjustment more difficult. It\nalso warned that the long-term stability of the euro zone should\nalso be assessed in terms of its capacity to absorb new entrants,\nand stressed that this implies that the enlargement of the\neuro zone must not undermine the required strengthening of economic\ngovernance within the zone.
\nIn the light of earlier problems, MEPs\nstressed that the judgments on whether a particular country meets\nthe inflation and interest rate criteria should be based on data\nprovided by the European Central Bank. However, they said that the\ninflation criterion, which is based on the inflation rates of the\nthree best-performing Member States, should be clarified, since it\nwas defined before the creation of the euro zone, with its single\ncurrency and unified monetary policy. The report said that it\nwas important to take into account the so-called Balassa-Samuelson\neffect (the view that fast-growing economies catching up with\nlarger economies will inevitably have higher inflation rates during\nthis transition) when considering the inflation criterion for\nemerging Member States.
\nMEPs called for Member States joining the euro\nto pay particular attention to consumer protection during the\nchangeover phase, with mandatory dual pricing for a sufficiently\nlong period of time and publicity campaigns encouraging citizens to\nshop around to avoid unjustified price increases.
\n\n
The European Parliament adopted a resolution based on\nthe own-initiative report by Werner Langen (EPP-ED, DE) on\nthe enlargement of the euro zone. It pointed out that the rate of\neconomic growth in the euro zone is currently at 1.8%, while that\nof the EU as a whole is 2% per year.
\nGeneral preconditions for the future enlargement of\nthe euro zone: Parliament recalled that all Member States with a\nderogation need to fulfil the Maastricht criteria before they can\njoin the euro zone, and that the requirements of the stability and\ngrowth pact apply to all Member States. It was convinced that an\nexamination of Member States\" preparedness to adopt the euro should\nbe built on the same definitions and principles as set out in past\nconvergence reports, so as to guarantee continuity and the equal\ntreatment of all Member States. It strongly opposed special\nprovisions concerning the fulfilment of the Maastricht criteria.\nMember States applying to join the euro zone (applicants for\naccession) must ensure full transparency in their policy decisions\n- such as the setting of conversion rates and entry target dates -\ntaken before and during membership of the ERM II.
\nThe technical preconditions for enlargement of the\neuro zone: Parliament asked\napplicants for accession to pay particular attention to consumer\nprotection during the changeover phase. It asked them also to\nimplement legislation requiring mandatory dual-pricing displays for\na sufficiently long duration and to establish effective procedures\nfor protecting consumers against unjustified price increases during\nthe changeover phase or longer. There must be clear public\ncampaigns which point out that the only weapon against unjustified\nprice increases is consumer power to choose their suppliers freely.\nSpecial attention should be paid to price setting in public or\nprivate monopoly situations and by public authorities. Parliament\ninvited them to put into place for a period of at least two years\nan observatory responsible for publishing data on the evolution of\nabout ten particularly significant consumer prices.
\nSpecial requirements for applicants for\naccession: Parliament pointed out\nthat a premature accession to the euro zone could lead to\nunexpected developments in the economic convergence process.\nEconomic convergence has not progressed far enough to allow rapid\naccession in some of the applicants for accession, as demonstrated\nby high inflation rates and excessive fiscal deficits observed in\nsome of them. Parliament recognised that several Member States have\nbuilt a solid base for the speedy introduction of the euro by\nensuring long-term fiscal sustainability. All criteria must be\nwholly fulfilled before adopting the euro. Parliament pointed out\nthat not all seven members of the ERM II without an opt-out clause\nhave reached the conditions for accession.
\nIt welcomed Slovenia as a new member of the euro zone\nbut regretted the negative recommendation issued to Lithuania and\nasked for a clear and comprehensive explanation of the basis of the\ncalculation undertaken in order to apply the inflation criteria.\nParliament pointed out that the inflation criterion requires an\ninflation rate that does not exceed, by more than 1,5%, that of the\nthree best-performing Member States as regards price stability,\nwith consumer prices of the previous 12 months being the basis for\nestablishing the average, on the basis of data provided by the\nCommission in cooperation with the ECB. It was concerned about the\nfact that two definitions of price stability are being used, one by\nthe ECB in its monetary policy (inflation below but close to 2%)\nand another in its convergence reports (the lowest possible\ninflation, excluding deflation). Parliament pointed out that the\nTreaty makes no such differentiation. These two interpretations of\nthe term price stability, which is specified in the Treaty, are\nmisleading and may have negative effects on the market and its\nparticipants in all Member States.
\nParliament pointed out that both the definition of the\nthree best-performing Member States in terms of price stability as\nwell as the method of calculating the reference value need to be\nclarified to reflect the fact that there are now twelve Member\nStates in the monetary union, using a single currency, which is\nsubject to a common monetary policy, and that the differentials in\ntheir individual inflation performance reflect structural factors\nrather than differences in macro-economic policy positions.\nHowever, it was important to take into account the so-called\nBalassa-Samuelson effect with respect to the inflation criteria for\nnew Member States.
\nFinally, Parliament strongly urged the Commission,\nfollowing the first two decisions on assessments of convergence\nprogrammes from new Member States towards the enlargement of the\neuro zone in the near future, to establish regular cooperation with\napplicants for accession in order to identify which economic policy\ninstruments best serve to improve inflation-related performance\nwithout prejudicing economic growth.
\n