Ready or Not? Constructing the Monetary Union Readiness Index

While all EU Member States can join the group’s monetary union, the eurozone, 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 EU Member States and for candidates of other currency unions. 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 eurozone 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 eurozone criteria in 2018, while Greece, Cyprus, Romania, Spain, and Italy the least.

ERHART Szilard; 

2021-01-29

Publications Office of the European Union

JRC121303

978-92-76-29423-8 (online),   

1831-9424 (online),   

EUR 30578 EN,    OP KJ-NA-30578-EN-N (online),   

https://publications.jrc.ec.europa.eu/repository/handle/JRC121303,   

10.2760/226646 (online),   

https://publications.jrc.ec.europa.eu/repository/bitstream/JRC121303/kjna30578enn.pdf