<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>While all EU Member States can join the group's monetary union, the euro area, some members are far more ready for the adoption and use of the single European currency. Here, we construct a new Monetary Union Readiness Index (MURI) for the EU Member States. The theoretical framework of the index is built on the economic theory of Optimal Currency Areas and EU regulations such as the Treaty and the Maastricht criteria, and the Regulation on the Macroeconomic Imbalance Procedure. The index measures (i) nominal convergence, (ii) real convergence, and (iii) macroeconomic stability. The MURI Index provides an easy to use real-time policy tool to evaluate both candidate and current euro area members. Hence, it complements, aggregates and communicates key information in annual convergence reports and in official statistics. Our evaluation finds that Austria, Finland, Denmark, Sweden and Germany showed the highest level of compliance with the different euro area criteria in 2018, while Greece, Cyprus, Romania, Spain, and Italy were the least compliant.</p>
</abstract>

While all EU Member States can join the group's monetary union, the euro area, some members are far more ready for the adoption and use of the single European currency. Here, we construct a new Monetary Union Readiness Index (MURI) for the EU Member States. The theoretical framework of the index is built on the economic theory of Optimal Currency Areas and EU regulations such as the Treaty and the Maastricht criteria, and the Regulation on the Macroeconomic Imbalance Procedure. The index measures (i) nominal convergence, (ii) real convergence, and (iii) macroeconomic stability. The MURI Index provides an easy to use real-time policy tool to evaluate both candidate and current euro area members. Hence, it complements, aggregates and communicates key information in annual convergence reports and in official statistics. Our evaluation finds that Austria, Finland, Denmark, Sweden and Germany showed the highest level of compliance with the different euro area criteria in 2018, while Greece, Cyprus, Romania, Spain, and Italy were the least compliant.

Ready or not? Constructing the Monetary Union Readiness Index

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Ready or not? Constructing the Monetary Union Readiness Index"}

While all EU Member States can join the group's monetary union, the euro area, some members are far more ready for the adoption and use of the single European...

Ready or not? Constructing the Monetary Union Readiness Index

Published Online: Jan 18, 2022

Page range: 23 - 66

Received: Sep 22, 2020

Accepted: Mar 09, 2021

DOI: https://doi.org/10.2478/jcbtp-2022-0002

Keywords
monetary union, single currency, composite indicator

© 2022 Szilárd Erhart, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Ready or not? Constructing the Monetary Union Readiness Index

Published Online: Jan 18, 2022

Page range: 23 - 66

Received: Sep 22, 2020

Accepted: Mar 09, 2021

DOI: https://doi.org/10.2478/jcbtp-2022-0002

Keywordsmonetary union, single currency, composite indicator

© 2022 Szilárd Erhart, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
monetary union, single currency, composite indicator