Jim Whitney

Maastricht and the European Monetary System: 1991

Convergence criteria:

  1. The rate of inflation, measured over the past year, must be no greater than 1.5% above the average of the three countries with the lowest inflation rates;
  2. Long-term interest rates, measured over the past year, must be no more than 2% above the average of the three countries with the lowest inflation rates;
  3. The budget deficit of each country (including central, regional and local government budget deficits), actual or prospective, must be no more than 3% of GDP, unless the ratio has been declining and is close to this reference value, or any excess is exceptional and temporary;
  4. Gross general government debt must not exceed 60% of GDP, unless the ratio is declining towards this reference value at a satisfactory rate; and
  5. Each currency must have adhered to normal fluctuation margins set by the ERM without severe tensions, for at least the preceding two years, and particularly without having devalued against another Member State at its own initiative.
 1992 values Inflation Long-term 
interest rates		 Deficit 
(% of GDP)		 Debt 
(% of GDP)		 Stable 
currency?		 Number of 
criteria met
Criterion: Lowest 3 
+1.5% = ___		 Lowest 3 inflation 
+ 2% = ___		 -3.0% 60% Parity 
+/-2.25%		  
Austria* 4.1% 8.3% -2.0% 58% Yes  
Belgium 2.7 8.6 -6.4 129 Yes  
Britain 4.1 9.9 -1.9 44 No  
Denmark 2.1 8.5 -1.7 67 Yes  
Finland* 2.6 15.1 -5.9 42 No  
France 3.0 8.5 -1.5 47 Yes  
Germany 4.7 7.8 -3.6 46 Yes  
Greece 17.8 20.8 -17.9 96 Yes  
Ireland 3.6 9.0 -4.1 103 Yes  
Italy 5.5 12.4 -9.9 101 No  
Luxembourg 2.9 8.1 +2.0 7 Yes  
Netherlands 4.4 8.1 -4.4 78 Yes  
Portugal 9.6 13.6 -5.4 65 No  
Spain 6.8 10.9 -4.4 46 No  
Sweden* 2.8 10.0 -5.1 77 No  
Avg., 3 lowest 
inflation countries:		 ____ ____  
Range: 2.1-17.8 7.8-20.8 +1.0 - -17.9 7-129 --- ---
Num. missing target:     10 8 6  

    * Did not join the European Monetary System until 1994 (so omit them when selecting the 3 lowest-inflation countries).