No need to hurry with the adoption of the euro

The Finance Ministry and the Czech National Bank again recommended that the cabinet should not set any euro adoption dates, for the time being, Finance Minister Alena Schillerová said on Twitter.

editor: REMIX NEWS

“A target date for the euro adoption remains unset; the Government approved a joint recommendation of the Finance Ministry and the Czech National Bank. We don’t want to risk a substantial devaluation of citizens’ savings. Moreover, the rules of the eurozone have changed significantly recently, and it is hard to estimate what requirements the Czech Republic would face after euro adoption,” wrote Schillerová on her Twitter profile.

In its statesmanship, the Czech Government stated it would not try to join the eurozone. Even though the Czech Republic will most likely meet all the Maastricht convergence criteria this year, maybe except the exchange rate criterion. Economists welcome the decision of Babiš’s government.

According to economist Lukáš Kovanda, it is wise not to set a target date yet. By adopting the euro, the Czech Republic would gain a more stable and less vulnerable currency. Also, many businesses would save a large part of costs connected with preventing the currency risk damage. On the other hand, the Czech economy would have to bear with long-term damage done by losing its independent monetary policy and a chance to keep up with more developed countries by the gradual strengthening of CZK, explained Kovanda.

Additionally, according to recent polls, the majority of Czechs oppose the adoption of the euro. In April, for example, only a fifth of respondents said they are in favor of the euro, while 73 percent preferred the Czech Republic not to enter the eurozone.

In their joint press release, the Czech National Bank and the Finance Ministry said that preparedness of the country to adopt the euro has improved compared to previous years, but some shortcomings persist. The unfinished process of real economic convergence of the Czech Republic can still be considered the main obstacle to joining the monetary union. Although convergence has resumed in recent years, the gaps in most key indicators, the price and wage levels, in particular, remain significant.


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