CEE-Benefits and Disadvantages of Joining the Eurozone


The Czech Republic, Hungary and Poland are pushing the Euro adoption process towards an unknown future, despite the fact that, within the last few years, some of them have been able to participate in the in ERM II mechanism, for a period of at least two years before they can qualify to adopt the Euro.

The Hungarian Minister for National Economy, Mihály Varga, recently said that Hungary cannot abandon its long-term intention of joining the Eurozone, but that there is no rush. What benefits would there be if the three countries met the Maastricht criteria?

“The Czech economy would benefit the most, from joining the Eurozone, as it would cut transaction costs and exchange rate volatility, for this small economy. It is very open and the Eurozone is its largest trading partner,” Juraj Kotian, Head of CEE Macro/Fixed Income Research of Erste Group, tells Emerging Europe.

“While many of these arguments are also valid for Hungary, its economy and, especially the labour market, are not so flexible. Plus Hungary does not have as big a fiscal space as the Czech Republic, which would allow it to run counter-cyclical policy during the downturn. The Czech Republic is much more converged, in terms of income and price levels and that is why a common monetary policy would be less than sub-optimal for a low-income country where a large part of price convergence is underway. The Polish economy is relatively closed and would benefit less from being a Eurozone member,” he adds.

“The Eurozone must be renewed, stabilised and its earlier attraction restored, in light of the difficulties and internal problems which have surfaced in the past years”, wrote the state secretary at the Ministry for National Economy, Andras Tállai, in a written response to independent MP Márta Demeter which was posted on the parliamentary website. “The introduction of the Euro may only become a timely matter if Hungary’s level of economic development approaches the average of the other Eurozone countries. Otherwise, Hungary could be the loser similar to some Mediterranean countries,” he continued.

Naturally, there are other drawbacks, too. Erste Group’s Mr Kotian says that by joining the Eurozone, the countries would lose their independent monetary policy and thus their ability to smooth their economic cycles on their own. “However, we could see that interest rate policies in the CEE have been closely linked and influenced by the European Central Bank’s (ECB) actions and that the possibility of letting currency depreciate was probably the strongest monetary channel during the crisis,” he adds.

That is why, countries which decide to join the Eurozone, should think how they are going to absorb or counterbalance the shocks, if they cannot use the exchange rate channel. Their fiscal position and the banking sector have to be in a good shape and measures should be put in place which avoid pro-cyclically in both areas.

“Joining the Eurozone right now would have some political costs, as new members will need to pay up front payments into rescue funds and it is still not clear what the final setup of the Eurozone will look like and if the continued future existence of Eurozone will require larger fiscal transfers.

Not joining the Eurozone would also have its costs, internationally, because countries that gained their EU membership, similarly committed to joining the Eurozone, after meeting the Maastricht criteria. Thus, any reluctance to join could be seen as a refusal of deeper integration and also as unfinished homework. Some western-European politicians are beginning to become tired of the cherry-picking of some CEE countries. So, it could be that the Cohesion Policy will be redesigned, after 2020, in such a way that only countries which show their solidarity (are already Eurozone members or clearly heading towards it) and fulfil their commitment to integration(in the migration crisis) would be eligible for Cohesion Funds,” Mr Kotian says.


We, the Post-Communist Generation, Have the Skills to Rid of the Past And Create Our Own Future

Global Expansion in the Digital Age

Ukraine’s Q2 Growth Climbs

kyiv ukraine emerging europe

Foreigners choose Minsk and Gomel as Belarus’ most attractive FDI destinations

Defending EU Values in Poland and Hungary

Eu hungary poland

Effective Policies Have Strengthened the Georgian Economy

TBILISI GEORGIA Jul. 18 2017: Bridge of Peace is a bow-shaped pedestrian bridge a steel and glass construction over the Kura River in downtown Tbilisi capital of Georgia

German Multivac invests €15 million near Sofia

Serbia’s New PM Is Cut From a Familiar Cloth

Serbian flag emerging europe

Merkel: Albania is taking big steps forward

United or Divided? Europe in the Face of the Challenges of Tomorrow

Could the West At Least Help Ukraine To Insure FDI Against Political Risks?

Meghri Becomes Armenia’s Third FEZ

armenia emerging europe

The Competitive Edge in Central and Eastern Europe

SOFIA BULGARIA - MAY 5: View of the Ivan Vazov National Theatre in Sofia on May 5 2016. Sofia is the largest city and capital of Bulgaria.

21st century Manufacturing Arrives at Great Stone

Great stone

Albania is creating three free economic zones

Central and Eastern European Consumers Are Joining the Global Trends for Change

The GREAT London Food Scene

Bakery in London

Serbia, Belarus and Ukraine Ranked Lowly by Wharton Business School

Kyiv Ukraine - April 172017: The postal square in Kiev on Podol the Dnipro river. view of the square from the river panorama

High-Tech Park in Minsk is growing rapidly

IMF Believes State-Owned Enterprises Must Be Reformed

Image of the banknotes of new Belarusian banknotes five rubles put into circulation July 1 2016

Doing Business Across Eurasia Could Be Easier

Eurasia emerging europe schneider group

The Long Tail of Global Expansion

Examining How a Strong Swiss Franc Could Single-Handedly Topple Poland’s Economy

E-lifestyle and Cyber Security: Some Views From Estonia

Cyber Security Protection Firewall Interface Concept

Macedonia’s Controversial Coalition Government

SKOPJE MACEDONIA emerging europe

Europe Needs To Be More Proactive In Embracing Armenia

Political Tensions Rise As Croatia Allegedly Breaks the Dublin III Refugee Regulation

croatia migrants

How Will Trump’s Visit Affect Polish Politics?

Donald trump

EBRD Finances Small Business Support And Foreign Trade Promotion In Belarus

Romania Surviving the Waves of Recent Political Tsunamis in Europe

Albania’s Construction Sector Supports the Country’s Growth

SARANDA, ALBANIA - MAY 18: View of the city Saranda, most important tourist attraction of the Albanian Riviera on May 18, 2017 in Saranda, Albania.

The Czech government attracts FDI and creates jobs

LGBT in CEE — A New Acceptance Is Being Born From Migration

EY: Belarus’ IT Scene Is Thriving

High tech park minsk

European Volatility Makes Economic Development Slower for Ukraine

Impact of Brexit on EU-CEE Not Overstated

theresa may brexit

A Bosnian Referendum Shows Russia’s Influence in the Balkans—As Well As Its Limits

Investigations Into the Corrupt Ukrainian Fuel and Energy Sectors

Ukrainian money hryvnia. The national currency. Corruption in Ukraine

Sarajevo Stock Exchange Connected to SEE Link

sarajevo stock exchange

Ukraine’s Reputation for Cheap Labour May Not Ring True in the Long-term

Are There Differences Between How Tax Regulations in Poland and IAS Treat Intangible Assets?

Not All Quiet on the Eastern Front

Nagorno-Karabakh Conflict Moves from Frozen to Kinetic


Czech Republic Renaming Has Real Economic Costs

Ukraine to Restart Privatisation to Realise Profits

Pricatisation electricity ukraine

Valga and Valka – Where Estonia and Latvia Work Together

Valga valka emerging europe

Brexit: Let’s Learn the Lesson and Hope a Better Europe Will Arise

Falling into Old Ways in 2017? Ukraine’s Struggle for Functioning Economic Institutions

Economy builds bridges in Mostar

Emphasising the Incongruence Between the V4 Countries

Macron emerging europe

Poland’s Drift Away From Democracy

EU Visa-Liberalisation Strengthens Georgia’s Pro-Western Path

georgia emerging europe eu

Digital Business Space Gives All Businesses an Office in Sarajevo

Sarajevo Bosnia and Herzegovina - August 24 2015. View from Vraca Memorial Park with building of Avaz Twist Tower

Poland’s Business Constitution Must Be Finalised

Front of finance ministry in Warsaw Poland with a fountain framing the entrance. Could be used for images about Euro currency problems

World Bank’s Doing Business Report 2016 Resume For Emerging Europe

Changing Perspectives and Showing That True Romania is a Vibrant Innovative Country

Stuck in Neutral: Georgia’s Constitutional Reforms

Tbilisi Parliament Georgia

PE and VC Investment In CEE Is At an Eight-Year High

venture capital

CEE Emigrants Could Boost Their Countries’ Economies

Londoners walking through Millennium Bridge with St.Paul's Cathedral at the background after sunset - London, UK

Old Fashioned Skulduggery Overshadows the Elections in Moldova

Towards a resilient Europe, strategies for the future

The CEE Region Is Making Advances in Prioritising Waste-to-Energy Projects

History as Destiny? Institutional Erosion in Ukraine and Poland

Albania’s Election Apathy

tirana albania

Estcoin: Estonia’s Own Digital Currency?

1 euro coin money (EUR) currency of European Union Estonia over blue background

The Slovak Matchmaking Fair open for registration

CEE — Do We Need a Launch Pad For Our On-Site Tech Intelligence in the Silicon Valley

GE Inaugurates Its New Bucharest Software Centre

Asian Outsource Developer Team Sitting At Desk Working Laptop Computer Mobile Application Software Real Office

Belarus’ Economy Is Slowly Recovering From Past Declines

The Right to Water: Who Can Change Today’s Situation?

After Its Significant Rise the Georgian Economy May Now Fall

Panorama of Tbilisi, Georgia in sunset rays. Vivid, saturated, splittoned image.

Croatian Salaries Are Growing in Line With Other CEE Countries

Dubrovnik Croatia emerging europe

Poland’s Q2 2017 Growth Is Stronger Than Expected

WARSAW, POLAND - MAY 07, 2016: Building Palace of Culture and Science among the modern buildings of the city

Revenues Of Bulgarian IT Companies Have Sextupled In the Last Decade

Fiscal Policy Predictability in CEE — It’s Time for Change

The Netherlands’ Objection to the Ukraine-EU Association Agreement could be Costly to Europe

Belarus 2020: Turning the Vicious Circle Into an Upward Spiral

Emerging Europe Makes Great Strides in Improving Business Regulation for Entrepreneurs

Skopje Macedonia

Estonia — Easy Doing Business Destination seminar in the UK

Plovdiv — an emerging outsourcing destination

Belarus is the most creative EEU country

People Power Reminds the Government of the Rule of Law

The EU’s Choice: Fundamental Reform Or Disintegration

The Global Outsourcing Industry — the Rise of the Phoenix

Air Passenger Volumes Reach Record High in the Baltics


Prepare for a New Europe

Are Labour Shortages Driving Economic Growth?

Bulgaria Needs a Reform-Oriented Government to Take Full Advantage of its EU Membership

bulgaria emerging europe

Czech Own Currency Insures Against Euro Losses

Euro Czech republic emerging europe

Big Fish, Small Fish, Where to Fish? On the Eve of the Fourth Industrial Revolution

Azerbaijan: The Rich Get Richer and the Poor Get Nothing


Will a Two-speed European Union Side-line the Visegrad Four?

Partnership is the Key to CEE-Indian Business

Globalisation Needs to Work, Not Only for the Few but for the Most and in Demonstrable Ways

Global Spread

After 25 Years of Restructuring, the Romanian Power Sector Is at a Crossroad

Hungary and Israel: the Collision of Past and Present

Budapest synagoge

Adam Smith’s Warning for Poland

A New Division Between Eastern And Western Europe?

The Morawiecki Plan Promises a Brighter Future for Poland

Outsourcing in Germany: Stop Talking at and Start Talking to

Bloomberg Croatia Business Day 2015

A Positive and Modern View of Entrepreneurship

Poland’s Capital Saturation Lower Than the Czech Republic’s

deloitte fdi poland

EU-CEE Is Still Growing at a Healthy Rate

Prague emerging europe

Good Match But Unlikely Marriage

Ex-Transition Economies’ FDI Recovery

dollar euro fdi

Ametek opened a new factory in Subotica

Prospering Czechia Still Needs a Bigger Workforce

prague emerging europe

Business Moving Forward with Cautious Optimism — Can Investors Win the Confidence Game?

A Risky Evaluation of Croatia’s Economy?

ZAGREB, CROATIA - JULY 17, 2017: Square Ban Josip Jelacic with tourists and trams on a summer day in Zagreb. City of Zagreb is the capital of Croatia.

2018 Elections — Vital Decisions for Hungary’s Future

Victor Orban energing europe

Bulgaria’s cooperation with Israel could boost the economy

Let’s Stop Wasting Time Redefining our Place in Europe

Slovenia is CEE’s leader in innovation

Poland’s Confusing GDP Growth

Lithuania Gives Innovation a StartUp

MILAN ITALY - MAY 2: People visit Lithuania pavilion at Expo universal exposition on the theme of food on MAY 2 2015 in Milan.

Poland’s Unicorn, Slovakia’s Flying Car and the Future of Europe

Europe at Odds over OPAL and Nord Stream 2

New investors interested in Belarus’ Great Stone Industrial Park

When Neutrality Isn’t an Option

President of the Russian Federation Vladimir Putin

Romanian Economy Grows Fast in 2017

Brasov cityscape panoramic and aerial view over medieval architecture of Brasov town, in Transylvania Romania

China: A Giant That Is Hard to Crack

Swimpassing Dniester Without Prejudice To Democracy

Parliament of the republic of moldova in chisinau, national flag, stefan cel mare street, spring time with blue sky

Resignation in Ukraine: War, Revolution, Crisis — Some Things Never Change

Finalising the DCFTA is Expected to Bring Multiple Benefits to Ukraine

Putin Urges Belarus to End Oil Transit Through Lithuania

Athens Greece - May 27 2016: Russian President Vladimir Putin delivers

Moldova Launces New e-Procurement System In Search For Positive Change

Photo team work process, holding contract hand, signs documents. Account managers young crew works with startup project.New idea presentation, analyze marketing reports.Blurred, film effect, horizontal.

The Voice of European Business Must Be Heard Loud and Clear by Brexit Negotiators

Is there any prospect of ‘Polexit’?

poland european union polexit

January Kicks Off an Exciting Year for Emerging Europe

Belarus-Turkey Investment Forum to increase investment and trade between the two countries

Where’s My Cheese? – The GREAT British Food Tour 2014

Cheese Shop

Poland: Is it Ready, and is it Time to Adopt the Euro?

Measuring Growth of Societies with GDP Alone Shows an Incomplete Picture

Polish Labour Market Deficits Are Impacting All

Construction site with crane and building. Construction site in western europe - in Poland.

The Capital Markets Union: a New Beginning in the European Financial Sector?

International Women’s Day — Let’s Take Action And Then Celebrate

Why Hungary’s New NGO Law Is Harmful for Business

Budapest, Hungary. Aerial view of the old city Budapest, Hungary with river and Parliament Building with cloudy blue sky

Poland Is Set To Become a Large Economic Zone

Aerial view over the building materials processing factory. View from above.

More Brexit Fears As the UK Proves To Be A Needed Member

City of London view from Waterloo Bridge. This view includes: St. Paul`s Cathedral The Gherkin Tower 42 and Blackfriars Bridge.

Business Standards Are High in SEE But Vary Widely

Aerial view of The Cathedral of the Assumption in Varna

How strong is V4?

Viktor Orban

Can Armenia Keep a Foot in Both Camps?

European union armenia russia emerging europe

The Sharing Economy Could Bring New Business Models to CEE

How Will Poland Approach the Brexit Negotiations?

Polish Tax Laws — Fighting a Winning Battle Against Tax Evaders

Automotive and Transport Companies Dominate the CEE Region

Car bodies on the production line inside automobile factory

Slovenia is the CEE region’s leader in VAT collection

Moldova Falls Victim to Politicising

moldova emerging europe

Poland Needs to Cling to the Eurozone

zloty euro emerging europe

Breaking With Imitations of the Past

Hungary’s Nationalist Assault on Free Enquiry

victor orban ceu

The EU’s Benign Neglect Of Eastern Europe

PiS Uses Media Control to Bring Poland to Heel

Jaroslaw kaczynski pis emerging europe

Will the New Five-day Visa-free Regime Encourage More Visitors to Belarus?

Investing in Ukrainian Food and Agriculture

Leave a Reply

Your email address will not be published. Required fields are marked *