Exchange rate mechanism II

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Map of European states with reference to the euro (as of July 10, 2020)
  • Eurozone
  • WKM II member who has an opt-out
  • ERM II member
  • EU members who need to adopt the euro
  • Areas outside the EU that officially use the euro
  • Areas outside the EU that use the euro unofficially
  • The exchange rate mechanism II (abbreviated ERM II ; English European Exchange Rate Mechanism II or ERM II ) is an exchange rate agreement that has existed between various EU countries since January 1, 1999 . It defines a maximum range of ± 15 percent around the central rate of the currency of an ERM II member to the euro .

    Designated as the European Monetary System II (EMS II) , it is the successor to the European Monetary System (EMS), which existed from March 13, 1979 to December 31, 1998.

    Three EU countries are currently participating in ERM II, Bulgaria , Denmark and Croatia , after Lithuania introduced the euro on January 1, 2015 and therefore left ERM II. Participation in Exchange Rate Mechanism II without tension for at least two years is one of the four EU convergence criteria for the introduction of the euro.



    On January 1, 1999, ERM II took the place of the original European Monetary System , or EMS I for short, in the third stage of Economic and Monetary Union (EMU) . The EMS was founded in 1979 as the successor to the European Exchange Rate Association. It was a system of fixed but adjustable exchange rates between the currencies of certain EU member states and was intended to create a zone that is largely free of profound exchange rate fluctuations. The three elements of the European Monetary System were, on the one hand, the exchange rate and intervention mechanism, a comprehensive financial support system, and on the other hand the European currency unit as a reference value and unit of account. In the European monetary system, a fluctuation range of the exchange rates of the participating states of ± 2.25% was agreed. In August 1993 the bandwidths were increased to 15 percent upwards and downwards. The final stage of EMU fixed irrevocable exchange rates for the currencies of the eleven member states that were part of the monetary union from the start. In addition, the implementation of a single monetary policy began under the responsibility of the European Central Bank (ECB). Like the earlier EMS, the ERM II includes fixed exchange rates. These may fluctuate within certain bandwidths. Furthermore, ERM II allows EU member states that are not yet part of the euro zone to be linked to the common currency. The anchor currency in the euro area is the euro . ERM II thus adapts its basic principles and structural elements to the changed conditions in the third stage of economic and monetary union.

    Legal bases

    ERM II is based on two legal pillars. The "Resolution of the European Council on the introduction of an exchange rate mechanism in the 3rd stage of economic and monetary union" of June 16, 1997 forms the first pillar. Their content is the principles and goals as well as the basic structural elements of the system. The second pillar contains an agreement of April 29, 2004. This agreement between the ECB and the national central banks of the non-euro area member states specifies the operational elements of the system.

    Basic principles

    There are many reasons for an exchange rate system between the euro and the currencies of the non-euro area countries. A basic principle is to prevent the common internal market in the EU from being impaired. These can be caused by excessive fluctuations in the nominal exchange rates of the currencies involved or by distortions in the real exchange rates . ERM II is intended to represent a supporting exchange rate system for EU member states that have not yet introduced the euro. The pegging of their currencies to the euro is intended to help achieve the necessary convergence for later accession to the euro area.
    Another principle of ERM II is equal treatment when the euro is introduced. Thus, for member states that introduce the euro later, at least two years of tension-free participation in the exchange rate mechanism is mandatory, as is the case for member states of the “first wave”.


    The WKM II fulfills two important functions. The first function involves aligning the exchange rates of the currencies of the Member States participating in the mechanism with the euro. The exchange rate between currencies participating in ERM II and the euro may fluctuate by a maximum of ± 15 percent; however, narrower fluctuation ranges can also be specified. On the other hand, ERM II represents a convergence criterion for the introduction of the euro. Countries that want to adopt the euro as a currency must therefore have participated in ERM II for two years without a central rate devaluation . This two-year participation in ERM II is one of four EU convergence criteria for the introduction of the euro.

    Currency boards

    The former member Lithuania of ERM II had a currency board with which the respective exchange rate was fixed. The currency board pegs the respective national currency to the euro unilaterally. In other words, these are unilateral obligations of the respective countries that are not binding on the ECB . According to the ECB, currency boards are not a substitute for participation in ERM II. Thus, countries that have set up a currency board must have participated in ERM II for at least two years before the convergence review, which is carried out before the introduction of the euro. There is an exception for countries with a sustainable currency board system based on euros. With the approval of the ECB, a two-fold change in its exchange rate system can be dispensed with.

    Structural features

    Central rates and bandwidths

    ERM II is a multilateral agreement between the respective member state, the member states of the euro currency area, the ECB and other member states participating in the exchange rate mechanism. ERM II is a system of fixed but also adjustable exchange rates that can fluctuate within certain bandwidths. In a first step, official central rates of currencies that are not yet part of the euro area will be set against the euro. In contrast to the EMS, this approach dispenses with the agreement of bilateral central rates between the participating non-euro currencies. ERM II offers the possibility of using different exchange rate strategies. However, freely fluctuating exchange rates , sliding exchange rate adjustments and connections to non-euro currencies are not compatible with ERM II. The exchange rate between currencies participating in ERM II and the euro is subject to a standard fluctuation range of ± 15 percent. This results in upper and lower limit rates for each currency, which are fundamentally to be defended. The ECB is only contractually obliged to intervene if there is a threat of exceeding the ± 15 percent deviation. However, it can also do this at any earlier point in time. Exchange rate stabilization should be achieved through a convergent economic policy of the non-euro countries. The supportive use of the interest rate instrument is also planned. So-called intramarginal interventions, i.e. smoothing foreign exchange market interventions by the central banks between the upper and lower limit exchange rates, are possible on a voluntary basis. There is still the possibility for countries with a correspondingly high degree of convergence to formally agree narrower bandwidths than the planned standard bandwidth. These must then also be defended by automatic interventions. If a closer connection is desired, the initiative should come from the Member State concerned. In addition, informal agreements can also be made bilaterally between the ECB and the central bank concerned, but these are not published.

    Interventions and intervention financing

    The ECB and the affected central bank from the non-euro area are obliged to intervene automatically and indefinitely in the foreign exchange markets when the intervention points are reached. The intervention points for the central banks involved are the upper and lower limit rates. The weak currency is bought against the strong currency. Interventions should generally be carried out in euros and the participating currencies, not in third-party currencies such as the US dollar . Every intervention means the creation of money for the central bank donating its own currency . With automatic and unlimited operation, this can quickly lead to a conflict with the goal of price stability. The limits of interventions are therefore where they disrupt the price stability-oriented monetary policy of a central bank. A safeguard clause included in ERM II allows the central banks involved to suspend these interventions as soon as such a conflict threatens. However, the credibility of the entire system must be taken into account when making this decision. In order to lend credibility to the obligation to intervene at the bandwidth limits, it was supplemented by financing facilities in ERM II. It follows that, if necessary, the ECB and the central banks involved grant each other very short-term credit lines for the purpose of mandatory interventions. In principle, this financing can be used automatically and indefinitely. Before doing so, however, the debtor central bank is required to make appropriate use of its own foreign exchange reserves. In principle, these foreign exchange market interventions are only of a supportive nature and must not replace a convergence-oriented monetary and financial policy.

    Decision-making process

    The decisions on the central rates and the standard range are made in a joint procedure. The European Commission , the Economic and Financial Committee , the ministers of the euro area member states, the ECB and the ministers and central bank governors of the non-euro area member states are involved. The decision to set central rates and standard bandwidths requires unanimity. An adjustment, i.e. a new setting of central rates, is also carried out using the same procedure. A timely adjustment of the nominal central rates may be necessary, for example, in order to anticipate developments that could lead to exchange rate tensions. Typically, in such a case, the national authorities apply for a change in central rate. The finance ministers of the euro countries advise on this together with the President of the ECB and the finance ministers and central bank governors of the ERM II countries. The European Commission is also taking part in the talks. In a final step, the procedure decided in this way is submitted to the Economic and Financial Committee for hearing. The national central bank and the ECB then implement it if necessary. A confidential process to review central rates can be initiated by any party participating in this mechanism, including the ECB. At the request of the non-euro area Member State concerned, a narrower range than the standard range may be set. This possibility is an exception as the standard bandwidth for Member States in the convergence process is appropriate. When the convergence process is very advanced, as in the case of Denmark , multilaterally agreed narrow bandwidths can be considered.



    With a resolution of the European Council on June 16, 1997, ERM II replaced the European Monetary System introduced in 1979. It was installed with the euro on January 1, 1999. As part of this, the euro is given the function of the key or anchor currency, so that the parities, ie the central rates for the currencies concerned, are linked to the euro. Since then, a total of nine member states have participated in ERM II. Denmark and Greece were the first countries to join ERM II. Both countries had previously belonged to ERM I, which ceased to exist in most of its member states on January 1, 1999 with the introduction of the euro. Greece automatically left ERM II when it introduced the euro as its currency on January 1, 2001, after having met the EU convergence criteria. Denmark is still a member of ERM II today, but does not intend to replace the exchange rate peg with the introduction of the euro.

    Accession of other countries


    Estonia joined ERM II on June 27, 2004. Estonia had already pegged its currency, the Estonian kroon , to the D-Mark or the euro since June 20, 1992 , which did not change when it joined ERM II. However, the country initially did not achieve its goal of introducing the euro after two years. It was not until May 12, 2010 that the European Commission recommended the introduction of the euro in Estonia. The accession was confirmed on June 17, 2010 by the finance ministers of the euro countries and the heads of government. Estonia thus joined the monetary union on January 1, 2011.


    Like Malta, Latvia has pegged the lats to the euro with a currency board since May 1, 2005 , but allowed fluctuations of one percent. Latvia joined the euro area on January 1, 2014.


    Exchange rates January 1999 - October 2010 LTL / EUR

    Also, Lithuania joined the ERM II on 27 June of 2004. Like Estonia, Lithuania had pegged its currency, the litas , to the euro since February 2, 2002 . However, the hoped-for quickest possible introduction of the euro after two years of membership in ERM II on January 1, 2007 failed because of one of the three criteria for membership , inflation : After the litas had continuously shown inflation rates of less than 2% since the ruble crisis in 1999, inflation reached a level due to the booming Economy in the reference period (March 2005 to April 2006) 2.66%. That was 0.06 percentage points more than the arithmetic mean of the three lowest inflation euro member states required in the Maastricht Treaty plus 1.5 percentage points (2.6%).

    Lithuania's accession to the monetary union was set for January 1, 2015 and was also carried out according to plan.


    In contrast to Estonia and Latvia, Slovenia , which joined ERM II at the same time, was able to introduce the euro on January 1, 2007. Therefore Slovenia has not participated in ERM II since then.


    On May 1, 2005, Malta switched its currency basket entirely to the euro, so the arrangement corresponded to a currency board. On May 16, 2007, the EU Commission and the ECB issued the recommendation to introduce the euro in Malta on January 1, 2008. It was confirmed by the Council of Finance Ministers on June 5, 2007 in Luxembourg . The final decision was taken by the heads of state and government of the EU at their summit on June 21, 2007. Thus, the euro was introduced in Malta on January 1, 2008.


    As with Malta and Latvia, the decision on the accession of EU member Cyprus to the European Commission on May 1, 2005 was not announced earlier in order to avoid speculation in the financial markets. Cyprus joined the euro zone on January 1, 2008, following the recommendation of the EU Commission and the ECB.


    On November 28, 2005, Slovakia also joined ERM II without prior notice. On March 19, 2007, the central rate between the Slovak koruna and the euro was adjusted in agreement between the EU and the Slovak National Bank . The justification for adjusting the central rate of the krone was a series of fundamental factors that had put the Slovak currency under upward pressure. According to the ECB, the revaluation of the currency helped maintain macroeconomic stability. However, the adjustment of the central rate had no effect on the prescribed two-year period, as it was an appreciation. Since the upward pressure continued, the central rate of the Slovak koruna was adjusted a second time on May 28, 2008 with effect from May 29, 2008. On May 7, 2008, based on the ECB's convergence report, the European Commission recommended the introduction of the euro in Slovakia on January 1, 2009, because the country had met all Maastricht criteria. This recommendation was confirmed on June 19, 2008 at the summit of the heads of state and government of the EU countries. On January 1, 2009, the euro was introduced in Slovakia. Slovakia thus left ERM II.


    Reasons for joining

    Decisive for the beginning and the duration of participation in ERM II are the prospects of increasing permanent convergence of fundamental economic factors. The general aim of this participation process is to promote macroeconomic stability in the new Member States in order to make the best possible contribution to sustainable growth and real convergence. In doing so, new Member States should take into account the restrictions on exchange rate flexibility. Participation in ERM II does not guarantee a supportive and consistent structure and macroeconomic policy, but it can create a disciplining effect in this regard. The new Member States will have to take into account the specific circumstances of their country in order to determine the optimal strategy for ERM II and the subsequent introduction of the euro. This includes the respective general strategy with regard to monetary policy integration as well as the monetary and exchange rate policy framework and the budget situation. The premature rigidity of the exchange rate can, for example, necessitate abrupt central rate adjustments, with potentially negative economic consequences. A higher degree of convergence could therefore be advisable for some member states before participating in ERM II, since the overall credibility of the exchange rate mechanism should also be preserved. Entry into the exchange rate mechanism continues to be subject to agreement on the central rate and the fluctuation band between the parties involved. In the crisis countries of the euro zone, the convergence of the fundamental economic factors has not yet occurred. On the other hand, just sticking to the currency mechanism and the associated expansion of the money supply create the conditions for a property boom, as can be seen in the example of Denmark. The most important advantage is the exchange rate stability for exports to and imports from the euro zone.

    Duration of participation

    The minimum duration of participation in ERM II prior to the introduction of the euro is stipulated in the Treaty establishing the European Community, or EC Treaty for short . This shows that before the convergence test that precedes the introduction of the euro, participation in ERM II is expected for at least two years. Thus, within the framework of ERM II, a member state must have adhered to the normal ranges provided for at least in the last two years before the convergence assessment without major tensions. Even within this period, he must not have devalued the central rate of his currency against the euro on his own initiative. Apart from this two-year minimum duration of participation in ERM II before the convergence test, there is no time limit for new members to remain in ERM II. In addition, there is no specific time schedule for the entry of the new member states and no assurance that the duration of participation in the ERM will be limited. The duration of participation in ERM II should therefore be less based on the required minimum duration of two years, but rather on the advantages for the convergence process. The original central rate does not necessarily have to be the final conversion rate for the introduction of the euro, as central rate adjustments may be necessary.


    EU member states that are not part of the euro area have the option of joining the exchange rate mechanism on a voluntary basis. However, participation in ERM II is expected from new member states as it is a prerequisite for the later introduction of the euro. You can join this at any time after joining the EU. To this end, the procedure for joining ERM II can be initiated by the Member State concerned at any time and is therefore not tied to specific deadlines. The parties involved in the mechanism must agree on the main features, in particular the central rates and the fluctuation band. Participation in or entry into ERM II does not depend on any preconditions or pre-defined criteria. However, political adjustments, for example with regard to price liberalization and financial policy, should be made before participation in the exchange rate mechanism in order to ensure smooth participation in ERM II. There is also a need to have credible public finance consolidation policies. Participation in ERM II, as with any exchange rate system, is just one element of the general policy framework. Therefore, it should not be viewed in isolation, but should be compatible with other elements of this general policy framework. This particularly includes monetary, financial and structural policy. The chosen central rate aims to reflect the best possible assessment of the equilibrium exchange rate at the time of joining the exchange rate mechanism. This assessment should be based on a wide range of economic indicators and developments, taking into account the market price. The parties to the agreement cannot determine in advance the outcome of such an analysis. They decide on the central rates by mutual agreement. Since the agreements are of a multilateral nature, it is necessary to avoid unilateral announcements about the desired central rates. Such central rate adjustments, for example due to changes in equilibrium exchange rates, should be made in good time. Furthermore, all parties have the opportunity to initiate a process to review the central rates.


    WKM II currently has three members. Denmark negotiated an exception in the Maastricht Treaty that releases the country from the obligation to adopt the euro (so-called "opt-out"). The decision to introduce the euro is made dependent on a referendum in Denmark.

    Members of the Exchange Rate Mechanism II
    country currency ISO 4217 Central rate
    (1 EUR =)
    exchange rate range
    ERM II accession Embargo period for
    euro introduction
    introduction of the euro
    BulgariaBulgaria Bulgaria Bulgarian lev BGN 1.95583 ± 15% (both sides) July 10, 2020 July 10, 2022 2022
    DenmarkDenmark Denmark Danish crown DKK 7.46038 ± 2.25% (both sides) January 1, 1999 expired no current plans
    CroatiaCroatia Croatia Croatian kuna HRK 7.53450 ± 15% (both sides) July 10, 2020 July 10, 2022 2022
    • Bulgaria had unilaterally pegged its currency to the D-Mark on July 1, 1997, and later to the euro, but was not a member of ERM II even after joining the EU because it was not allowed to join because of inflation problems. In 2009 it was still planned to join in 2013. However, this had to be postponed in 2010 due to a high deficit. As a result of the global financial crisis , the deficit was 3.7% instead of 1.9% of GDP in 2009, which means that the prescribed maximum value of 3.0% for this convergence criterion was not achieved. In January 2015, the Bulgarian finance minister said that Bulgaria could join ERM II by the end of 2018. In April 2018, EU Monetary Affairs Commissioner Pierre Moscovici declared that Bulgaria was "undoubtedly the next member of the euro area". A date for the introduction of the euro or entry into ERM II was not given. In June 2018 the Bulgarian finance minister announced that his country would apply to join ERM II at the end of June 2018. In July 2018 it was said that Bulgaria would introduce the euro in 2022 at the earliest. On October 30, 2019, the finance minister announced that the country was aiming to join ERM II by the end of April 2020. In February 2020, Prime Minister Borrisov said Bulgaria was aiming to join ERM II by July 2020. In April 2020, the Bulgarian head of government aimed to join in May 2020. Bulgaria was admitted to ERM II on July 10, 2020.
    • Denmark has a contractually agreed right to “opt out”, ie not to join the euro area. However, the country is participating in ERM II. In a first referendum on September 28, 2000, 53.1% of voters voted against the introduction of the euro. The Danish government under Anders Fogh Rasmussen announced in 2007 that it would hold a referendum on joining the euro after the adoption of the Lisbon Treaty , which was confirmed in 2009 by his successor Lars Løkke Rasmussen . In the spring of 2010, however, the government refrained from doing this due to the global economic crisis in order to put the state finances in order first. There will be another vote if Denmark meets the EU convergence criteria again and the majority in Parliament supports the introduction of the euro. In March 2011, Rasmussen again indicated the possibility of a referendum before the parliamentary elections in autumn. The announcement of a referendum by the Thorning-Schmidt government was withdrawn in June 2012. Despite the revaluation pressure against the euro (after the unilateral exchange rate fluctuation limit for the Swiss franc against the euro was abandoned on January 15, 2015), the abandonment of the fixed exchange rate link between the krone and the euro is not considered. Denmark has given assurances that if the euro is introduced, the Faroese kroon could be retained; this would then be linked to the euro via a fixed rate.
    • In 2013, Croatia ruled out introducing the euro before 2017 or 2018, as this would have required accession to ERM II in 2016 anyway. At the beginning of March 2016, the Croatian prime minister announced that Croatia would adopt the euro in four years. The head of the Croatian national bank contradicted this, however, and said that joining the euro in four years would be objectively impossible. Accession is only possible in 2022. In October 2017, the Croatian head of government said the goal was to be a member of ERM II in 2020 and a member of the euro area in 2025. In December 2018, the Croatian government wanted to join ERM II in mid-2020. At the beginning of July 2019, Croatia applied for membership in ERM II. On July 10, 2020, Croatia was admitted to ERM II.

    Future members

    Five members of the European Union are not yet members of the Eurozone or ERM II: Poland , Romania , Sweden , the Czech Republic and Hungary . All five member states have signed a treaty to adopt the euro. Since a minimum two-year membership in ERM II is a prerequisite for the introduction of the euro, countries that are not currently participating in ERM II cannot join the euro zone in the next two years.

    EU currency card (as of January 1, 2015)
    Future members of the Exchange Rate Mechanism II
    country currency ISO 4217 Exchange rate (1 EUR =)
    PolandPoland Poland Polish zloty PLN 4.3986
    RomaniaRomania Romania Romanian leu RON 4.84
    SwedenSweden Sweden Swedish crown SEK 10,369
    Czech RepublicCzech Republic Czech Republic Czech crown CZK 26.091
    HungaryHungary Hungary Hungarian forint HOOF 350.83
    • In Poland , then Prime Minister Donald Tusk announced in his first government statement in 2007 that he wanted to introduce the euro “as quickly as possible” and at the 18th Economic Forum in Krynica named 2011 as the target for the introduction of the euro. In August 2009, however, the then deputy finance minister announced that Poland would not adopt the euro before 2014. The reason is the global financial crisis . In an interview with Spiegel Online in April 2011, Tusk said “Poland will join the euro zone”. He did not want to give a date, but said: "In 2015 we will meet all the criteria if nothing unforeseen happens." On December 2, 2011, the then Polish Foreign Minister Radek Sikorski said in a radio interview that Poland would be within four years Can and would like to introduce the euro as the official currency in 2015/16, if certain reforms are implemented by then and the introduction of the common currency serves Polish interests. On February 26, 2013, then-President Bronisław Komorowski said after a meeting with the Prime Minister that a “political decision” on joining the Eurozone could be made after the 2015 parliamentary elections, provided Poland met the criteria for joining the Euro. The problem is that, according to the Polish constitution, only the Polish National Bank is allowed to spend money. According to a statement by Poland's former Prime Minister Donald Tusk in July 2013, however, the majority required to amend the constitution will probably not be given in the next legislative period (2015-2019) either. The introduction of the euro would therefore only be expected in the 2020s. In the wake of the Crimean crisis in early 2014, however, there were increasing voices in Poland to cooperate even more closely with Western Europe than before. For example, the then head of the Polish central bank, Marek Belka , who had previously been more of a euro skeptic, spoke out on March 10 for an accelerated course in his country towards the introduction of the euro. The then Polish Minister of Economic Affairs Janusz Piechociński again declared on October 11, 2014 that Poland would not introduce the euro until after 2020. In March 2017, the then Polish Deputy Prime Minister Mateusz Morawiecki declared : “In ten or 20 years, when the most important economic parameters have adapted to those in Germany, France and the Netherlands, we will think about it”.
    • Romania has been a member of the EU since 2007 and intends to adopt the euro. Like Bulgaria , Romania has problems keeping up with the inflation rate; the planned introduction of the euro has therefore been postponed several times. In 2007, the Romanian National Bank set itself the goal of 2015. In November 2011, Romanian President Traian Băsescu reiterated the goal of introducing the euro in 2015. In March 2013, President Băsescu stated that the accession date could no longer be held in 2015. At the beginning of May 2013, Băsescu declared that 2017 was the “optimal date” for joining the euro. In May 2014, the Romanian government announced January 1, 2019 as the planned accession date. In October 2015, the Romanian National Bank declared joining the euro by 2019 to be unrealistic. In February 2019, the Romanian government announced 2024 as the date for joining the euro. The governor of the Romanian Central Bank confirmed in July 2019 that Romania should adopt the euro by 2024.
    • By joining the EU in 1995, Sweden committed itself to adopting the euro as soon as it met all convergence criteria. Nevertheless, the Swedish government subjected the introduction of the euro to a referendum, in which on September 14, 2003 a majority voted against. In order to avoid this dilemma, the government decided not to join Exchange Rate Mechanism II and thus permanently bypass the fulfillment of the convergence criteria - which would otherwise be relatively unproblematic due to the good economic situation in Sweden. This situation has so far been tolerated by the European Commission , although Sweden is regarded as a special case, since it joined the EU after the decision on monetary union but before the introduction of the euro. The general agreement of the political parties included that the result would be respected for ten years and that the euro would not be introduced without another referendum. The government led by Fredrik Reinfeldt from 2006 to 2014 was largely in favor of the introduction of the euro, but did not intend to hold a referendum on joining the euro. After surveys briefly showed a small majority in favor of the introduction of the euro in 2009, a clear majority was formed against the introduction of the euro.
    • The Czech Republic originally wanted to introduce the euro in 2010. However, this goal was abandoned by accepting a higher budget deficit than allowed in order to be able to build up the country's infrastructure. In the course of 2009, a roadmap for the introduction of the euro should be drawn up and a final date on November 1, 2009 should be given. This date has been postponed indefinitely due to the deteriorating economic situation. In March 2010, the Czech Ministry of Finance said that 2015 would hardly be possible either. In March 2013, President Miloš Zeman stated that the Czech Republic could not introduce the euro until 2018 at the earliest. In June 2014, Zeman considered joining the euro to be possible until 2017. In June 2015, Prime Minister Sobotka told Deutschlandfunk: "The year 2020 is the earliest possible date for the introduction of the euro." In May 2017, Prime Minister Sobotka spoke of a period for the introduction of the euro of "five to ten years". In May 2018, the Czech Republic did not want to set a date for the introduction of the euro, as the country fears that it will be liable for Greece's debts.
    • In Hungary , the government announced the date for the introduction of the euro in 2008 and later in 2010, but both dates could not be met due to the continuously high national deficit. There has been no official target date since 2006. In February 2011, Prime Minister Viktor Orbán said in an interview that he did not want to introduce the euro in Hungary before 2020.

    former members

    ERM II has so far proven to be a stable exchange rate arrangement. Since 1999 only the central rate of the Slovak koruna has had to be adjusted twice, i.e. revalued. The central rates of six other countries that have meanwhile introduced the euro have remained unchanged during their ERM II membership. In all cases, the last ERM II central rate was also used as the final conversion rate to the euro.

    Former members of the Exchange Rate Mechanism II
    country currency ISO 4217 ERM II accession Euro accession Exchange rate
    (1 EUR =)
    EstoniaEstonia Estonia Estonian kroon EEK June 27, 2004 January 1, 2011 15.6466
    GreeceGreece Greece drachma GRD January 1, 1999 January 1, 2001 340.750
    LatviaLatvia Latvia Lats LVL April 29, 2005 1st of January 2014 0.702804
    LithuaniaLithuania Lithuania Litas LTL June 28, 2004 January 1, 2015 3.4528
    MaltaMalta Malta Maltese lira MTL April 29, 2005 January 1, 2008 0.429300
    SlovakiaSlovakia Slovakia Slovak crown SKK November 28, 2005 January 1, 2009 30.1260 *
    SloveniaSlovenia Slovenia Tolar SIT June 27, 2004 January 1, 2007 239.640
    Cyprus RepublicRepublic of Cyprus Cyprus Cyprus pound CYP April 29, 2005 January 1, 2008 0.585274

    * corresponds to the last ERM II central rate valid since May 29, 2008 (central rate March 19, 2007 to May 28, 2008: 35.4424 ; before: 38.4550 )

    Comparison with ERM I.


    ERM I and ERM II have some things in common. These include the resolution of realignments as part of a joint procedure. The bandwidths and central rates are also determined in such a framework. The finance ministers, the presidents of the ECB and the national central banks and the Commission are all involved. The standard range for both is ± 15 percent (originally ± 2.25 percent in ERM I, then ± 15 percent since 1993), although narrower ranges are possible. In both ERM I and ERM II, when the intervention points are reached, the national central banks automatically intervene with appropriate financing.


    There are several key differences between ERM I and ERM II. The multilateral exchange rate pegs of ERM I will be replaced by bilateral pegs between the euro and the currencies of the countries not yet participating. ERM I was thus characterized by multilateral intervention obligations. With ERM II, on the other hand, there are bilateral intervention obligations between the ECB and the central banks of the not yet participating member states. Another difference is in the key currency . The euro acts as a formal anchor in ERM II. The focus is on promoting the convergence of the “pre-ins” towards the macroeconomic stability standards of the euro area. In the previous model, the D-Mark was intended as the anchor currency , albeit not formally. In contrast to WKM I, ERM II is deliberately designed asymmetrically. This means that the alignment is not based on the average of the currencies, as in ERM I on the currency basket ECU, but against the euro. This represents a central currency committed to the goal of price stability . In addition, there was no so-called reservation clause in ERM I. In the current mechanism, the ECB and all non-euro area national central banks have the right to suspend their interventions if the price stability objective is at risk. In ERM II, all parties, including the ECB, also have the option of initiating a procedure to reset the central rate of a currency. In ERM I, however, the realignment had to come from the relevant member state.

    Critical consideration

    Critical voices fear that joining ERM II would prompt foreign exchange speculators to test the central banks' defenses against their currencies. The starting point of such a scenario is the suspicion of devaluation against a currency. A speculator then takes out a loan in this currency and changes it directly into euros. If other speculators follow this example or if the credit itself is large enough, the currency in question will come under devaluation pressure and the central banks would have to intervene. If the speculators prevail and the currency is devalued, they will have to pay back less money than they originally took out as a loan. In order to avoid the starting point of such speculations, the suspicion of devaluation, joining ERM II should be planned precisely in terms of time. Rapid accession for political reasons should therefore be avoided. Rather, the real progress in convergence and a consistent economic policy in the new EU countries should determine the right time to join the exchange rate mechanism.

    With regard to international economic relations, fixed exchange rates are more advantageous than flexible exchange rate mechanisms. In order to be able to maintain a fixed exchange rate, international capital movements must be controlled. In addition, the participating countries must have flexible economic structures and develop similarly. Temporary exchange rate adjustments and the coordination of economic policy in these countries are therefore necessary. In other parts of the world, too, currency mergers based on the model of the European Monetary Union are conceivable. Political democratization and the liberalization of capital movements in particular suggest this. It is therefore conceivable that experiences from the euro area could be incorporated into the reorganization of the world monetary system. If the large industrialized countries were willing to act politically in the same direction, fixed exchange rates would, at best, make economic sense between their currency blocks.


    • Ansgar Belke / Martin Hebler: EU expansion to the east, euro and labor markets. Oldenbourg, 2002, ISBN 3-486-25873-7 .
    • Philip MV Hallensleben: From the European Monetary System to the Exchange Rate Mechanism II of the European Economic and Monetary Union. Publishing house Dr. Kovac, 2001, ISBN 3-8300-0394-3 .
    • Jochen Beutel: Differentiated Integration in the European Economic and Monetary Union (publications on European and international private, banking and commercial law). de Gruyter, 2006, ISBN 3-89949-307-9 .

    Web links

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