Reviving convergence: making EU member states fit for joining the euro area

There has been real upward convergence between non-euro area member states of the European Union (EU) and the euro area in the last decade. However, this positive trend is slowing down and in some cases reversing. Discussions of required reforms often do not go beyond macroeconomic considerations surrounding the Copenhagen criteria for euro area accession. However, increasing institutional quality and efficiency is crucial for these member states’ accession to the euro area and long-term resilience. EU funds absorption rates, economic resilience during shocks, investment rates and general economic efficiency, among others, are all highly impacted by the effectiveness and quality of public and private institutions. And here, these member states are some of the poorest performers in the Union, and have seen little progress in the past decade. Current instruments such as the Structural Reform Support Service that provides technical assistance for public institutional reform have had successes in member state reform processes. Building upon and integrating these instruments in a future euro area accession platform could prove invaluable.