It has already reached a high degree of convergence after the consolidation of its financial position, including a considerable decline in government deficit and public debt. In mid-December, the Bank of Greece reduced its key interest rates by 75 basis points. This move was a clear attempt to come close to the ECB's lower interest rate level, but has spurred rumors that the next step might be a currency revaluation. Both political and economic considerations explain the Greek aspiration for EMU membership. For a small country with limited political clout, like Greece, dual EU and EMU membership can increase its influence over important issues.
Economic considerations are at least as important.
Despite the anticipated loss of autonomy in exchange rate regulation and monetary policy, the expected gains far outweigh the potential losses. Next to traditional arguments of lower transaction costs, Greece can expect to benefit from lower market volatility, enhanced credibility, and direct foreign investment. It is indisputable that some transitional problems, such as inflationary risks and weak interest rates, will require the government's close attention. The Greek authorities, however, have repeatedly stated their determination to become the euro's twelfth member state, thus bringing both feet inside Europe's gateway. Next to such economic benefits as price transparency, low inflation, less exchange rate uncertainty, two further issues are significant.