ACCESSION OF CEE COUNTRIES TO EMU: NOMINAL CONVERGENCE, REAL CONVERGENCE AND OPTIMUM CURRENCY AREA CRITERIA *

Abstract. Central and Eastern European Countries (CEEC) are expected to become effective members of the European Monetary Union (EMU) after having satisfied a number of criteria which will take them some years to achieve, following their accession to the European Union (EU). According to the official views of the European Commission and the European Central Bank (ECB), monetary integration of CEEC in the euro area should be a multilateral, successive and phased process, leading finally to their adoption of the euro. The paper addresses some issues relating to the suitability and readiness of CEEC with regard to joining EMU. Special reference is made to optimum currency area criteria, not only as theoretical background for monetary integration, but also to provide an additional insight into the measurement of the relative suitability and readiness of individual accession countries to join EMU. As an illustration, the paper attempts to measure some of the optimum currency area indicators for the case of Slovenia, and concludes that Slovenia is relatively suitable and well-prepared to join the euro area. In particular, Slovenia is not expected to be exposed to serious asymmetric shocks, once the country joins EMU.