Welcome to the 20th anniversary of the EU currency union. Despite all the challenges the EU has faced its currency union, dubbed the Eurozone by the press, has continued and appears to be expanding to additional EU members.
Despite the controversies and scandal involving Croatia’s plans to convert from kuna to euro currency, the nation will join the Eurozone in 2023.
Romania leads the list of EU member nations with designs on joining the common currency zone as well, with Euronews reporting about 75 percent of those Romanian citizens surveyed would like to see their nation dump its leu denominated currency in favor of euros. The same Eurobarometer survey indicated 69 percent of people surveyed in Hungary would like to see the euro replace the Hungarian forint.
The other EU member countries that to date have not yet adopted the euro as their currency are Bulgaria, Czech Republic, Hungary, Poland, and Sweden.
According to the Hungarian publication Ungarn Heute, 43 percent of those individuals surveyed in Sweden are interested in seeing their country adopt the common currency, while 33 percent of those surveyed in the Czech Republic want to replace the koruna with the euro.
Hungary has political challenges to face before joining the Eurozone. Opposing political parties have vowed they will join the currency union within five years if they are elected in April. The current prime minister has indicated it will be decades before Hungary joins the currency union if his party remains in power.
There are some economic problems involved. The Hungarian forint has been depreciating against the euro. Surveys indicate only 24 percent of Hungarians believe using the euro will restrict their national economic policy. This is the opposite end of the economic spectrum from Sweden, whom according to surveys 67 percent of their citizens view adopting the euro as crimping their economic agenda.
Poland has not set a date to drop its zloty currency in favor of the euro, however as with all other EU member nations Poland is required through the Treaty of Accession to “participate in the Economic and Monetary Union from the date of accession as a member state with a derogation.” In other words, Poland is required to eventually join the currency union.
To participate in the Economic and Monetary Union a country must have a deficit that does not exceed three percent of its Gross Domestic Product, government debt that is less that 60 percent of the GDP and must have an inflation rate of no more than 1.5 percent of the three most price stable EU countries within the past year.
The currency union has been a financial success. Trade between countries that are now members of the EU were increasing by less than a paltry five percent between 1990 and 2002. Since the introduction of the common currency trade growth has been calculated at close to 200 percent. There will be 19 Eurozone countries counting Croatia.
Addressing a digital currency in a Feb. 14 press release the European Central Bank said, “A digital euro would complement cash, not replace it. This is also why we launched the process for redesigning our bank notes. The redesign is part of a long-term development process to ensure that the next generation of euro bank notes will continue to be secure, accepted and an efficient means of payment.”
Nothing was said of redesigning the EU side of euro coins. The ECB noted it will keep the European Parliament informed as well as seek input from EU citizens for designs and themes for the new bank notes. The EP is one of three legislative branches of the EU.
The ECB plans to issue redesigned bank notes in 2024. According to the Feb. 14 press release, “For more than 20 years now, euro bank notes and coins have circulated smoothly. They are a tangible testament to the euro’s success. The cash in our pockets reminds us that, despite our diversity, we share a common endeavor that goes beyond national borders.”