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The replacement of the national currency with the euro issubject not only to the nominal convergence, but also to thereal convergence of the country acceding to the monetary union.By default, the price levels convergence criterion is expressedas a deviation of the acceding country’s price level from theaverage price level of the euro area. However, this method isnot well suited to measure price convergence. The weighteddeviation of the Czech price level from the price level of thekey trading partners of the Czech Republic is more appropriate.According to such new indicator, the Czech price level is 6.6pp closer to the price level of the euro area compared to thetraditional indicator.

Perspectives of the accession of the Czech Republic to the Euro area in terms of the price level convergence