FRANKFURT (Reuters) – Bulgaria and Croatia have been accepted into ERM-2 mechanism, a mandatory waiting room for joining the euro, kicking off the currency bloc’s first expansion in half a decade, the European Central Bank said on Friday.
Getting a nod from euro zone finance ministers and ECB officials, the two East European nations will also join the bloc’s banking union, putting their biggest lenders under the ECB’s supervision from Oct. 1, the bank said in a statement.
The two nations must spend at least 2 years in ERM-2 before starting the practical preparations to join the euro, a process that takes roughly another year, making 2023 the earliest year for their membership.
During the two years, the two nations need to pursue “sound” economic policies, meet membership criteria and have a stable exchange rate.
As part of ERM-2, the ECB set the central rate of the Bulgarian lev at 1.95583 against the euro while the Croatian kuna’s central rate was set at 7.53450.
Lithuania was the last to join the 19-member euro zone in 2015 and while all EU members other than Denmark are obligated to join, few others appear to be making serious effort.
Indeed, just last month the ECB said that none of the prospective members of the bloc meet all the accession criteria and some may be diverging from the long-set rules of euro membership.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
