Bloomberg’s Lenka Ponikelska writes about the continued appeal to some in non-Eurozone central Europe of membership in the single currency.
In the Czech Republic, the prime minister said on Wednesday that joining the euro soon would help the economy after the president challenged the central bank’s long-standing resistance with a vow to appoint policy makers who favor the common currency. In Poland, the main divide between the top two candidates in the May 10 presidential election is whether the region’s biggest economy should ditch the zloty.
“It’s quite interesting how the sentiment has shifted — I’m slightly surprised by this,” William Jackson, London-based senior economist at Capital Economics Ltd., said by phone on Wednesday. “As the story coming from the euro zone in recent years has been negative, it’s very hard to imagine how the euro case for the public would be made now.”
The obstacles are many. Romania, which has set 2019 as a potential target date, and Hungary don’t meet all the economic criteria. Poland faces legal hurdles and the Czech government has said it won’t set a date during its four-year term. As a standoff between Greece and euro-area leaders threatens to push the country into insolvency and potential exit, opinion polls show most Czechs and Poles oppose a switch.
The appeal of the euro, which all European Union members save Britain and Denmark are technically obliged to join, suffered when the area had to provide emergency loans to ailing members during the economic crisis. While five ex-communist countries that joined the trading bloc in 2004 — Slovakia, Slovenia, Estonia, Latvia, and Lithuania — have acceded, the Czech Republic, Poland and Hungary don’t have road maps.
The region’s three biggest economies argued that floating currencies and control over monetary policy helps shield themselves against shocks like the euro crisis even if smaller countries may benefit from lower exchange-rate volatility and reduced trade costs. Facing weakening in their korunas, zlotys, and forints, some politicians in eastern Europe are questioning that logic.