Real convergence—generally understood as income catching-up—is arguably the most important challenge for the new member states and one of the great opportunities of an expanded European Union (EU). In addition, adoption of the euro is one of the main policy objectives of the new member states and an obligation of EU membership. What is the link between real convergence and adoption of the euro? Some observers have implicitly or explicitly argued that the large income gap impedes monetary integration and that real convergence to certain levels would be needed before new member states could participate in the euro area.