April 7, 2009

ECB rejects quick entry into eurozone

The European Central Bank said that European countries couldn't adopt the euro without becoming members of the eurozone.

Responding to a media article concerning a draft of a confidential International Monetary Fund report, ECB Governing Council member Ewald Nowotny said, membership for European monetary union has very clear rules and these rules have to be followed.

From an economic point of view, (loosening rules for membership) would not be a good signal, Nowotny said.

The Financial Times article described IMF proposals to allow countries to adopt the euro currency without holding a board seat in the European Central Bank, the EUobserver reported Tuesday.

Entry to the eurozone, adjudicated by the European Commission and the ECB, requires a track record of low inflation, a level of public debt less than 3 percent of the gross domestic product and a stable currency exchange rate.

Chairman of the Eurogroup of financial ministers Jean-Claude Juncker, who is also the prime minister of Luxembourg, has advocated strict adherence to these rules, the EUobserver said. On the other hand, billionaire currency speculator George Soros has said it membership was a tremendous advantage.

There was no question of a weaker country dropping out, Soros told the Financial Times.