In a situation where the inflation rate is around 0 percent, room for monetary policy response through interest rate control would be limited, as I mentioned earlier. Under such circumstances, there is a risk of economic stagnation and deflation becoming prolonged once downward pressure is exerted on the economy.
A smooth participation in ERM II is testimony for the sustainability of the necessary convergence process prior the adoption of the euro. ERM II participation ties the exchange rate and hence acts as a “testing phase” of the irrevocably exchange rate fixation.