ABSTRACT
The convergence criteria contained within the Treaty on European Union (TEU) are more concerned with examining transitory cyclical movements in financial indicators, rather than concentrating upon structural convergence in the real economy. The TEU focused upon 'nominal' convergence, measured by reference values that largely reflect historical levels of debt and deficit in the 'core' EU countries. The identification of those individual EU member states that have demonstrated their suitability for single currency membership is officially determined by their attainment of the five Maastricht Convergence Criteria (MCC) established in the TEU. The advantages of low inflation and high employment could be obtained by pursuing coherent domestic economic policies. However, if participation within Ecnomic and Monetary Union (EMU) is considered to be in the national interest, economic theory demonstrates that membership should wait until prior convergence has been achieved; optimum currency area theory provides the tests to establish the validity of convergence.
