1. Explain the significance of identifying and meeting convergence criteria prior to introducing the euro?

2. Can you think why the EMI selected the convergence criteria of inflation, budget balance, debt and interest rates, and not some other?

3. Kenneth Clarke, the UK Conservative Chancellor over much of the period when the selection of convergence criteria was being discussed, argued that flexible labour markets should also be a convergence goal. Why might he argue this and what difficulties might there be in specifying such a goal?