Slovakia has joined the European exchange rate mechanism (ERM II), the antechamber of the euro.

Bratislava thus joins Malta, Cyprus, Latvia, Lithuania, Estonia and Slovenia which, together with Denmark, decided to link their currency to the euro. Denmark, however, does not intend to adopt the single currency.

This stage, which will last a minimum of two years, is considered to be an indispensable preliminary step to joining the common currency, alongside the other Maastricht criteria.

The central parity of the Slovakian crown has been set at 38.4550 Koruna to the euro and the currency may fluctuate plus or minus 15 per cent.

In order to observe the Maastricht criteria, Slovakia plans to cut its deficit from 4.1 per cent this year to three per cent in 2006.

Economic and Monetary Affairs Commissioner Joachim Almunia yesterday told the Economic and Monetary Committee of the European Parliament that Malta is well placed to adopt the euro as from the beginning of 2008.

Mr Almunia said Estonia, Lithuania and Slovakia could adopt the common currency as early as 2007. Malta and Cyprus could join a year later.

In its communication to the Commission, the Maltese government has set January 2008 as its target date to abandon the Maltese lira and adopt the euro. However, a final decision will not be taken before the adoption of a report by the Commission and the European Council, expected to be issued in April 2007. By that date Malta will also have to put its financial house in order to come in line with the Maastricht criteria, including a reduction of the deficit to under three per cent of GDP.