8.2 Liabilities arising from the credit facility under ERM II
Romania has also expressed interest in joining ERM II
but there is currently no formal timetable in place.
An EU council statement said, 'Once they have provided a positive assessment, a decision will be taken by the ERM II
parties on the formal application of the Bulgarian authorities for ERM II
The ERM II
requires countries to maintain at most a 15% fluctuation band around an agreed central exchange rate between the euro and the country's currency.
Immediately after coming to power at the end of July 2009, the Bulgarian Government announced that entering the Exchange Rate Mechanism II (ERM II
) was a major priority.
To adopt the euro, they still have to participate in ERM II
for at least 2 yr before a convergence assessment for EMU membership can be made.
Thus, the economic environment might not only influence the timing of entry and the duration of participation in the ERM II
but also the broader issue of fast or slow entry.
The exchange rate mechanism criterion requires participation in ERM II
within the normal fluctuation bands for two years.
Bulgaria has fulfilled practically all commitments undertaken a year ago to enter ERM II
, also known as the Eurozone waiting room.
In a report, the central bank said that six of the eight nations that were to adopt the euro, Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden, have not yet joined the exchange rate mechanism II (ERM II
) for more than two years, which is a prerequisite for membership.
Under the Exchange Rate Mechanism, or ERM II
, countries such as Bulgaria, Poland and Hungary, which have set themselves targets for entering the single currency, must maintain their currencies at a rate of 15% above or below the euro for two years before being allowed to join.
Countries with high public debt and with a currency board arrangement will try to join the euro area quickly, because ERM II
(Exchange Rate Mechanism) participation will lead to a welfare loss.