The Central and Eastern European Union Enlargement and the EMU: Nominal Convergence and the Optimum Currency Areas Approach

Until recently, one of the main shortcomings of the structure of the EU was the existence of a frontier between Eastern and Western Europe. However, in the period 1994–1996 ten Central and East European Countries (CEECs) applied for EU membership, signing European association agreements as a first step in the integration process. The outcome was the European Commission’s decision in 1997 to begin negotiations in order to expand the EU to the east. This is the fifth EU enlargement, but it introduces new issues regarding economic integration and nominal convergence. The strategy adopted in the Amsterdam Treaty (1996) and Luxembourg EU Council (December 1997) was to consider the CEEC-10 as potential candidates, but to begin a gradual integration process to determine the feasibility of full membership. Initially, five countries were selected, mainly on the basis of their relatively favourable economic situation: the Czech Republic, Hungary, Poland, Slovenia and Estonia.