A timeline of the eurozone’s growth
The eurozone is readying itself for the admission of Lithuania, which on 1 January will become the 19th member to adopt the single currency.
The enlargement of the eurozone has been a continuous process since it was launched on 1 January 1999, the date when the euro became the official currency of 11 European Union member states – Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain.
It replaced the existing national currencies in two stages: first, in January 1999, as an accounting currency for non-cash payments, while the old currencies were still used for cash payments. Then, on 1 January 2002 the euro coins and banknotes were physically introduced in what by then were the 12 countries of the eurozone. Greece had been admitted on 1 January 2001.
The 12 countries that joined the EU in May 2004 were admitted on condition that they would join the eurozone in due course. It took until 2007 before the first of them did so: Slovenia blazed the trail. A year later, both Malta and Cyprus joined, followed by Slovakia in 2009. The Baltic states have been the most recent countries to join, with Estonia leading the way in 2011, followed by Latvia in 2014 and Lithuania now poised on the brink.
Of the countries that joined the EU in 2004, it is the biggest that now remain on the outside: Poland, the Czech Republic and Hungary.
The obligation to adopt the euro has been a feature of all EU accession treaties since 1992. The three countries that are allowed separate euro adoption referendums on eurozone membership are those whose EU membership precedes that date: the United Kingdom and Denmark. Sweden joined the EU in 1995 and is therefore theoretically obliged to join the eurozone, but it maintains that it has a choice over whether to join the exchange-rate mechanism (ERM II), which is a precondition of eurozone membership.
In the case of Denmark, a referendum on opt-outs of EU legislation is expected to be held in the next parliamentary mandate in the period 2015-19. If Denmark does decide to discuss the membership of the eurozone, and the citizens vote in favour, the country’s admission could proceed rapidly. Denmark is already part of the ERM, which aims at ensuring financial stability between the euro and other EU currencies.
Member states are not permitted to join the eurozone before their public finances comply with debt and deficit criteria outlined by the Stability and Growth Pact, which aim to keep inflation and long-term interest rates below certain values. They must also ensure that their national laws comply with the rules of the European Central Bank.
There are seven states under this obligation to join the euro, which are therefore labouring to meet the eurozone’s criteria. albeit with varying degrees of enthusiasm: in addition to Sweden, the Czech Republic, Hungary and Poland, there are the two countries admitted to the EU in 2007, Romania and Bulgaria, and the country admitted in 2013, Croatia.
A timeline of the eurozone's expansion
1 January 1999: euro launched in Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.
1 January 2001 in Greece.
1 January 2007 in Slovenia.
1 January 2008 in Cyprus and Malta.
1 January 2009 in Slovakia.
1 January 2011 in Estonia.
1 January 2014 in Latvia.
1 January 2015 in Lithuania.
In June 2014 the European Commission and the European Central Bank published convergence reports on the progress made by these countries in fulfilling the criteria.
The reports show that in most of the countries the laws do not, either partially or entirely, comply with all the requirements for central bank independence, the monetary financing prohibition, and legal integration into the eurozone.
National political developments make implementation more difficulty. Hungary, for example, declared in 2003 that it wanted to replace the forint with the euro from 2014. But now, the country is outside ERM II and the current government has said it does not want to adopt the euro before 2020.