Factbox-Criteria to Adopt the Euro Currency

Criteria for EU Nations to Adopt the Euro Currency

BRUSSELS (Reuters) - Bulgaria might enter the euro zone and become the bloc's 21st member on January 1, 2026, if it receives a green light from the European Commission and the European Central Bank in 2025.

European Union countries aspiring to adopt the single currency need to fulfill criteria in four areas: inflation, public finances, the exchange rate and long-term borrowing costs.

INFLATION

* Inflation in the candidate country needs to be close to that in the three best performing EU members for a period of one year before examination of the country's bid. The upper limit for inflation is calculated as the average of the three best performers, plus 1.5 percentage point.

DEFICIT/DEBT

* A country's budget deficit must be below the European Union's limit of 3 percent of gross domestic product (GDP) in a sustainable way.

EXCHANGE RATE

* A candidate country's currency must remain relatively stable against the euro over two years, in what is called the Exchange Rate Mechanism (ERM-2). The currency can appreciate, but should not devalue in a significant way.

LONG-TERM BORROWING COSTS

* Yields on long-term government bonds issued by the candidate country should not be more than 2 percentage points above the average of the three European Union countries with the lowest inflation, which were used for setting the price stability criterion.

(Reporting by Jan Strupczewski)