Annual Report 2004

value of 6.4% over the 12 months
ending in August 2004 was chosen.
The Czech Republic, Cyprus, Latvia,
Lithuania, Malta, Slovenia, Slovakia
and Sweden fulfilled this criterion.
A harmonized long-term interest rate
to examine the degree of convergence
was not available for Estonia,
which has no long-term government
bonds or similar securities, but no
indications suggested a negative assessment.
The Convergence Reports
also included an examination of the
Milestones of European Integration in 2004
compatibility of national legislation
with the Treaty, notably the compatibility
of the statutes of the countriesÕ
NCBs with the Treaty and with the
ESCB Statute. None of the countries
fulfill the necessary legal conditions.
Hence, the status of the 11 countries
(the ten new Member States and
Sweden) as Member States with a
derogation remains in force. The
next Convergence Reports are expected
for 2006.
— On May 1, 2004, the biggest enlargement in the EUÕs history became reality. The EU
expanded to include 25 countries. The accession of the Czech Republic, Estonia, Cyprus,
Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia (in protocol order) boosted
the population of the EU from some 370 million to about 455 million people.
— On June 18, 2004, the European Council meeting in Brussels reached an agreement on the
Treaty establishing a Constitution for Europe (Constitutional Treaty). The Constitutional Treaty
is set to replace all current European treaties by a single legal act with the intention of making
the EU more democratic, transparent and efficient; it is currently expected to enter into force
on November 1, 2006.
— Estonia, Lithuania and Slovenia took a major step toward introducing the euro by joining
ERM II on June 28, 2004. The central parities against the euro were set at EEK/EUR
15.6466, LTL/EUR 3.45280 and SIT/EUR 239.640. Participation in ERM II for at least two
years without severe tensions is one of the convergence criteria a country has to fulfill to
introduce the euro.
— On December 14, 2004, the accession negotiations with Bulgaria and Romania were formally
concluded. Both countries are scheduled to become EU members on January 1, 2007.
— At its meeting on December 16 and 17, 2004, the European Council agreed to open accession
negotiations with Turkey and Croatia. As a prerequisite for the opening of accession talks,
Turkey is committed to signing the protocol on the adaptation of the Ankara Agreement
(a free-trade agreement between the EU and Turkey, which has to be extended to the ten
new EU members). The negotiation framework for Turkey is to be based on the following principles,
which may be considered: long transitional periods, derogations, specific arrangements
or permanent safeguard clauses for areas such as freedom of movement of persons, structural
policies or agriculture. The opening of accession negotiations with Croatia is conditional
on full cooperation with the International Criminal Tribunal for the former Yugoslavia.
The Intergovernmental Conference
started its proceedings on October
4, 2003, and at the Brussels
European Council on June 18, 2004,
reached an agreement on the Treaty
establishing a Constitution for Europe
(Constitutional Treaty). The final
draft of the Constitutional Treaty
has been submitted to the Member
The Eurosystem Secures Price Stability
Box 4
States for ratification and is currently
expected to enter into force
on November 1, 2006.
The Constitutional Treaty reaffirms
the framework conditions for
monetary union as embodied in the
Treaty on European Union; all
amendments are purely technical.
The legal and institutional framework
Treaty establishing
a Constitution for
Europe
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