It results from standard economic analysis that fast growing economies require a higher level of real interest rates to remain on a sustainable path. Monetary policy in the Euro area is designed for advanced economies and would be inappropriate for less developed economies. Indeed, a premature entry would imply a downward shock on interest rates and other policy parameters such as reserve ratios. This would generate supply/demand imbalances, credit booms and asset or consumer prices inflation resulting in financial vulnerabilities and deteriorating competitiveness. It should come as no surprise that the third element relates again to the advancement in structural reforms: these are preconditions for ensuring viable economic development inside a monetary union. Such reforms are necessary in order to enhance flexibility, thus giving the economy the necessary adjustment capacity required in a monetary union. The key role of structural policies naturally includes the conduct of fiscal policy reforms (tax, pensions, and social security) and investments in public goods (infrastructure, education, healthcare, etc.) that have to be completed before entry in order to provide enough leeway for fiscal policy to serve as a stabilisation instrument inside the monetary union. The New Member States that have joined the EU since 2004 have made considerable progress in nominal and real convergence. Recovering from historic episodes of economic contraction, hyperinflation and exchange rate depreciation, these economies have recorded gradual macroeconomic stabilisation characterised by disinflation, high rates of GDP growth and real exchange rate appreciation.
I see three main reasons: -  not only to guarantee the credibility of the Euro (which is, in itself, in the interest of entrant countries themselves who will adopt this currency as their own);  -  but also to ensure equality of treatment between all entrants, who have to be applied, over time, the same entry criteria;  -  and, last but not least, to avoid the emergence of disequilibria after entry requiring painful adjustments, as shown by the Portuguese situation. Sound macroeconomic conditions have to be guaranteed before and after accession. Joining the Euro area does not guarantee convergence in development levels. National institutions and policy remain crucial after entry. The Maastricht criteria encompass: limited inflation differential vis-à-vis the best performing EU member; stability of the nominal exchange rate with the Euro; sound fiscal accounts; and low long term interest rate spread vis-à-vis the best performing EU member states in terms of price stability. BIS Review 115/2007  3  They must be satisfied simultaneously for a country to be able to join the EMU. Regarding participation in the ERM II, it is not a mere two-year “waiting room” before the Euro. It is a “training room” for full implementation and assimilation, by all economic agents, of sound policies. Therefore the criteria defined in the Treaty must be fulfilled, not just once, but with a good track record and with good prospects.