What are the economic advantages of euro area enlargement?
The euro is a public good that brings many benefits to the participating countries. It eliminates exchange rate risks between countries that adopt it, thereby lowering interest rates, and allows countries to enjoy the benefits of price stability, which is the primary objective of the ECB. It also paves the way for a deep, liquid and integrated capital market among countries that adopt it. Euro area enlargement means that a larger number of EU Member States can enjoy these benefits. Furthermore, some of the economic advantages of monetary union, such as the elimination of exchange rate uncertainties, increase with the size of the euro area. People no longer have to change money, and pay transaction costs to do so, when travelling through the euro area. However, in order to be able to fully exploit the benefits, a country must be ready for the euro. This will be assessed on the basis of the Maastricht convergence criteria (see question 4).
