Annual Report 2004

The Eurosystem Secures Price Stability
The Convergence
Reports of the ECB
and the European
Commission
The EU expands to
become the EU-25
at the beginning of 2005, but it does
not take into account a number of
objectives. Also, in a European comparison,
rules governing the liberal
professions are far more stringent in
Austria. The results of the OECDÕs
PISA 7 survey assessing studentsÕ
knowledge and skills have triggered
lively discussions about educational
reform in 2005.
European Integration
Makes Headway
By concluding the accession negotiations
with ten countries, the Copenhagen
European Council of December
12 and 13, 2002, laid the foundation
for the accession of the Czech
Republic, Cyprus, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Slovakia
and Slovenia to the EU. After
the Accession Treaty was signed in
Athens in April 2003, the historical
enlargement of the EU by these ten
Member States was celebrated on
May 1, 2004.
As part and parcel of their EU
accession, the new Member States
became members of the ESCB, and
their central bank presidents became
members of the General Council of
the ECB. Likewise, their NCBsÕ experts
in the ESCB committees now
7 Programme for International Student Assessment.
have full member status whenever
the committees meet in ESCB composition,
i.e. with representatives
from all EU NCBs.
EU enlargement automatically
entailed an increase in the ECBÕs subscribed
capital to EUR 5.565 billion
on May 1, 2004. The 12 Eurosystem
NCBs have paid up their subscribed
capital in full. The 10 new non-euro
area NCBs are required to pay up a
minimal percentage of their subscribed
capital (7% as at May 1, 2004)
as a contribution to the operational
costsoftheECB.Atthesametime,
the paid-up shares of the nonparticipating
NCBs (Bank of England, Danmarks
Nationalbank and Sveriges
Riksbank) in the ECBÕs subscribed
capital increased from 5% to 7%.
The European Commission and
the ECB published their Convergence
Reports 2004 on October 20, 2004.
They conclude that at the moment
of examination neither the new
Member States nor Sweden fulfilled
all the criteria needed to introduce
the euro.
To measure the countriesÕ compliance
with the inflation criterion,
the August 2004 reference value of
2.4% was used. The Czech Republic,
Estonia, Cyprus, Lithuania and Sweden
had inflation rates below the
reference value. Five countries —
Estonia, Latvia, Lithuania, Slovenia
and Sweden — fulfilled the criterion
on the government budgetary position,
with fiscal deficits below the
3% of GDP reference value and debt
ratios below the 60% of GDP reference
value. None of these Member
States participated in the exchange
rate mechanism ERM II for the full
two-year reference period. To determine
compliance with the long-term
interest rate criterion, a reference
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Annual Report 2004