Based on the analysis, a number of conclusions emerge. The new member states stand to gain substantially from the adoption of the euro. The lower interest rate in the Euro Area will promote catch up growth, while financial stability will be enhanced due to the elimination of exchange rate risk to the euro. Being a member of the Euro Area will make the financing of the large current account deficits easier and less costly. Furthermore it will eliminate the risk of a currency crisis following sharp reversals of capital flows. .
