Here are the key euro convergence criteria (relating to government finance) that must be met for European Union member states to enter the Economic and Monetary Union and adopt the euro as their currency.
- Annual government deficit:
- The ratio of the annual government deficit to gross domestic product (GDP) must not exceed 3% at the end of the preceding fiscal year. If not, it is at least required to reach a level close to 3%. Only exceptional and temporary excesses would be granted for exceptional cases.
- Government Debt:
- The ratio of gross government debt to GDP must not exceed 60% at the end of the preceding fiscal year. Even if the target cannot be achieved due to the specific conditions, the ratio must have sufficiently diminished and must be approaching the reference value at a satisfactory pace.
- No Bail-Out
- And then there is the famous "no bail-out" rule. Article 103, section 1, says that "the community shall not be liable for the debt of governments…"
- Aside from Greece, just about every other Eurozone country violated the deficit/debt rules
