Jun 26, 2024

Czechia Meets Only One Criterion for Euro Adoption, Says European Commission

The Czech Republic meets only one of the four criteria required to join the eurozone and adopt the euro, according to the European Commission’s (EC) Convergence Report 2024.

The report, released on Wednesday, highlights that the Czech Republic fulfills the criterion for long-term interest rate convergence but fails to meet the standards for price stability, healthy public finances, and exchange rate stability. The Commission expects progress on the criterion of healthy public finances.

The EC assessed six European Union (EU) member states that have not yet adopted the euro but have pledged to do so eventually. These countries include Bulgaria, Hungary, Poland, Romania, and Sweden, along with the Czech Republic.

None of these nations currently meet all the criteria, including Poland and Hungary.

Before joining the eurozone, candidate countries must participate in the ERM-2 exchange rate mechanism. Among the six evaluated nations, only Bulgaria is currently a member of ERM-2.

Denmark, another EU member that does not use the euro, was not assessed by the Commission. Denmark has a permanent exemption from the Maastricht criteria and is not obliged to adopt the euro.

When the Czech Republic joined the EU in 2004, it committed to adopting the euro. However, the current government led by Petr Fiala (ODS), like its predecessors, does not prioritize euro adoption.

In contrast, Slovakia has been using the euro for fifteen years, and many Czech businesses are advocating for its introduction.

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The coalition parties are debating whether to delay the decision on euro adoption until after the next parliamentary elections. ODS and TOP 09 are opposed to any immediate plans for adopting the euro, while STAN and the Pirates favor creating a timetable for preparation.

In February, the government tasked the National Economic Council (NERV) and the Legislative Council with evaluating the economic and legal implications of joining ERM-2 and adopting the euro. This assessment is due by the end of October.

The cabinet will review the Czech Republic’s readiness for the euro in the first quarter of next year.

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