Under Article 121 of the Treaty, the convergence of long-term interest rates is one of the criteria for assessing the achievement of a high degree of sustainable convergence for Economic and Monetary Union (EMU).
The Bank of Latvia publishes information on Latvia's long-term interest rate that is used for convergence assessment purposes in the quarterly "Macroeconomic Developments Report" (see Table 1) and on its website (see the section Statistics – Banking and Monetary Statistics). Long-term interest rates of all European Union member states are published by the European Central Bank on a monthly basis. For Estonia, a specific long-term interest rate indicator is reported.
The long-term interest rate statistics for the acceding countries refer to the monthly average interest rates for long-term government bonds issued by the acceding country, quoted as percentages per annum. The statistical framework for the definition of the long-term interest rates for the acceding countries follows the principles that were specified and implemented in conjunction with the European Commission as part of the preparations for Stage Three of Economic and Monetary Union (EMU) for the current EU Member States.
Four criteria specified in the Treaty apply to the acceding countries joining the European Union. A regular assessment of the existing Member States' obligations in respect of EMU is also undertaken.
The fourth Maastricht criterion is based on the level of long-term interest rates. Article 4 of the Protocol on the convergence criteria, as referred to in Article 121 of the Treaty, states that compliance with the fourth convergence criterion "shall mean that, observed over a period of one year before the examination, a Member State has had an average nominal long-term interest rate that does not exceed by more than 2 percentage points that of, at most, the three best performing Member States in terms of price stability. Interest rates shall be measured on the basis of long-term government bonds or comparable securities, taking into account differences in national definitions."
The European Central Bank and the European Commission have, together with the national central banks of the acceding countries, worked towards the identification of representative debt securities that can be used to measure long-term nominal interest rates and of alternative long-term interest rate indicators where suitable government bonds are not available. The national central banks of the acceding countries have also provided essential input via two surveys on national capital markets and structures, designed and undertaken jointly by the ECB and the European Commission in 2002 and 2003.
The results are presented in the report entitled "Bond markets and long-term interest rates in EU accession countries" and set out in 12 country-specific chapters, each of which is divided into five sections. The sections describe the size and activity of the national debt securities markets and interest rates, including bond yields, as well as certain features of individual long-term debt securities issued by the general government, and refer briefly to securities market regulation. The results provided the basis for the provision of long-term interest rates for convergence assessment purposes.