This paper evaluates the progress of the transition countries in their attempt to qualify for Economic and Monetary Union (EMU) and the adoption of the Euro. The Maastricht Treaty, which outlines the timetable for EMU, includes a set of criteria that are preconditions for membership.  The criteria are convergence in the macroeconomic variables of inflation, interest rates, government budget deficits, national debt, and exchange rates.  The purpose of this paper is to measure the extent of compliance with the criteria over time.

This paper also examines the choice of exchange rate regime of the transition countries and how that decision affects their ability to meet the Maastricht convergence criteria.  The accession countries maintain a wide diversity of exchange rate regimes from currency board arrangements to floating regimes.  In between the two extremes are crawling pegs with predetermined bands of fluctuation which may be narrow or wide.  Initial analysis suggests no direct link between the exchange rate regime in place and the progress in fulfilling the convergence goals.  The choice of exchange rate regime, however, is an important issue as a countires' goal is to fix their currency to the Euro and allow for an efficient transition to the adoption of the Euro.