Euro zone expansion stalls as crisis rages
FRANKFURT (Reuters) - None of the eight countries on the waiting list to join the euro currently meet the requirements to do so, the European Central Bank said on Wednesday - assuming, that is, that they still want to.
Before the debt crisis took off, European Union members not yet part of the common currency were queuing up to join.
But as the crisis has spread, rocking even core euro zone economies like Spain and Italy, those still on track to adopt the currency have begun to have second thoughts.
Six of the eight candidates on the list to adopt the euro - Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden - have not yet fulfilled the prerequisite of joining the exchange rate mechanism II (ERM II) for more than two years, the ECB said in a report.
While Lithuania and Latvia can tick that box, Latvian Finance Minister Andris Vilks told public broadcaster Latvian Television on Wednesday the country would only join once the euro zone's debt crisis had subsided. The Baltic nation had initially wanted to join the euro in 2014.
"If the difficult period is behind the euro zone, then we will join. If the difficult period is not behind it, then we won't join," he said. "We may not join if our expenses are too high or if there's an unclear situation."
"The main (thing) is to understand that Latvia will never join the monetary union with unclear game rules," he said, adding that he expected the euro to survive the crisis but that it could end up having fewer members.
"There will be either stabilization or a real division," he said.
The ECB also cited issues such as central bank independence as a point of concern regarding all eight euro candidates.
"In all countries under review, incompatibilities remain regarding central bank independence. This refers, in particular, to the institutional, personal and financial independence of central banks," the ECB said in a statement.
In particular, Hungary has been in the spotlight after the ECB earlier this year said the country's central bank law passed late last year could hurt the National Bank of Hungary's independence.
In its report, which refers to legislation enacted before March 12, it repeated its stance that "Hungarian law does not comply with all the requirements for central bank independence".
Hungary's parliament is due to vote on an amendment to the central bank law next week, and financial markets are keen to see whether the changes will be sufficient to unlock talks for international financial support.
Poland's Prime Minister Donald Tusk said earlier in May that the country was still ready to join the euro, though he added that the EU had to continue to integrate economically and politically as well.
Denmark and the United Kingdom were not part of the ECB assessment as they negotiated exclusions from the single currency when it was instituted.
(Additional reporting by Aleks Tapinsh in Riga; Editing by Hugh Lawson)
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