Companies want the euro, but the government is delaying adoption

According to surveys, the vast majority of Czech companies would welcome the introduction of the euro. They consider its advantage to be mainly the elimination of exchange rate risk and the reduction of transaction costs. The benefits of paying in euros would then prevail, even according to most economists.

“The positives prevail. And we should have accepted it earlier, after all, our economy met the criteria for the transition to the euro several times in the past, but this opportunity was deliberately wasted. And the same is the case today: the adoption of the euro is only a question of political will,” pointed out the former rector of the University of Economics in Prague, Richard Hindls.

“We should stop masking the political reluctance to introduce the euro with economic reasons, because the criteria for adoption are achievable in the foreseeable future. And besides, the adoption of the euro in the Czech Republic will undoubtedly happen sooner or later anyway, so why keep hesitating and looking for reasons why it can’t be done,” he added.

Slovaks have had the euro for 15 years. It helped us, they say

Economy

Ex-prime minister and former CNB governor Jiří Rusnok does not have a strong opinion on the issue of adopting the euro, according to his words. “We now have quite a few other, more important tasks to deal with. I would therefore try to focus my energy more on them. The mere adoption of another currency unit will not make us richer and happier,” he declared.

Economist of Cyrrus Vít Hradil pointed out that in addition to sacrificing one’s own monetary policy, joining the eurozone also carries other risks.

“The main one is the loss of a flexible exchange rate, which serves to automatically balance the imbalances that constantly arise in the international economic environment. Not to mention the transfer of competences in the supervision of the functioning of the domestic financial market to the European Central Bank, or the notorious tendency towards greater indebtedness, which the eurozone states usually show,” he noted.

According to Hradil, although the adoption of the euro also entails concrete benefits – primarily the elimination of currency conversion costs and exchange rate uncertainty – the overall balance of this step is, however, doubtful. “After all, it’s probably not a coincidence that we don’t have any convincing evidence of the economic benefits of eurozone membership in countries like ours. In this situation, I do not consider postponing the adoption of the euro as a mistake,” said the analyst.

Former European Commissioner Pavel Telička mentioned that during the negotiations of the Eurozone, not only its issues are resolved, but various coalitions are often formed there, which then go to the negotiations of the entire European Union. “The latest surveys show that three quarters of companies are clearly in favor of introducing the euro. As for the autonomous monetary policy, we could talk about whether it was always good or not expensive. The euro has an economic as well as a political dimension, and that is greater integration, involvement and influence,” said Telička.

President Petr Pavel is also a supporter of the euro, who believes that without its introduction it is impossible to “play in the first league” in Europe. Only those who don’t have it are dissatisfied with it,” he said on Tuesday.

Pavel strikes again: He called for the adoption of the euro

Homemade

In an April survey for the ČSOB Index of Business Expectations, a third of small and medium-sized enterprises and entrepreneurs stated that they expect the introduction of the euro in the Czech Republic by 2030. Another 28 percent expect entry into the eurozone by 2035 at the latest. In total, this represents the majority of 61 percent.

The government postponed the decision

However, the majority of Czechs are not inclined to adopt a common European currency. In a January survey by the Median agency for Czech Radio, 21 percent of people said that the introduction of the euro would be beneficial for them personally. However, 68 percent of respondents had the opposite opinion. At the same time, the benefits of the euro were mentioned mainly by students and businessmen.

The Ministry of Finance and the CNB expect that the Czech Republic could meet four of the five criteria for joining the eurozone this year, but will no longer meet the exchange rate stability criterion, which requires two-year membership in the “euro waiting room”, the ERM II exchange rate mechanism.

However, in February of this year, the government decided not to set a deadline for joining the eurozone or ERM II. It called on the National Economic Council of the Government and the Legislative Council of the Government to evaluate the economic and legal effects of joining ERM II and the introduction of the euro by the end of October. The cabinet is to return to the assessment of the country’s readiness for the euro in the first quarter of next year.

Last year, Croatia introduced the single European currency, becoming the 20th member country of the eurozone. Bulgaria, which is one of the poorest countries in the EU, is already heading to the eurozone and hopes that the adoption of the euro will help it attract more investment.