Euro adoption in the Czech Republic, Hungary and Poland: Laggards by default and laggards by choice
- 114 Downloads
How can we explain the politics of euro adoption in the Czech Republic, Hungary and Poland? How did the euro crisis influence their positions regarding euro adoption? This article builds on the domestic politics literature and argues: (i) countries that had joined the Exchange Rate Mechanism-2 early had an easier time adopting the euro compared with those that did not; (ii) having a pro-euro government is a necessary but not sufficient condition to adopt the euro; (iii) the political ideology of the ruling elites is important; (iv) the existence of veto points in the domestic political system influences the entire process; (v) although the three countries have made central banks technically independent, the appointment process remains highly political and complex, which has led to conflicts between the central banks and the governments – negatively influencing euro adoption policies; and (vi) the issue does not have much salience in public opinion and thus does not usually feature high on the agenda of the political elites in the three countries. These three countries to date have not adopted the euro for various domestic political reasons. They have at different times been laggards by default or laggards by choice.
KeywordsCentral Europe domestic politics economic and monetary union euro adoption new member states political elites
This research is part of a larger project that studies euro adoption in the member states of the EU that joined in 2004. The authors are grateful for financial support from the Social Science and Humanities Research Council of Canada (SSHRC) that funded this research. This work was further supported by a grant from the Netherlands Institute for Advanced Study in the Humanities and Social Sciences (NIAS). Earlier versions of this article were presented at various conferences over a longer timespan. The authors thank the many discussants and participants of those panels for comments and feedback on those earlier versions. They also thank the editors and anonymous reviewers of this journal for constructive criticism and suggestions.
- Bernhard, W., Broz, L. and Clark, W.R. (2002) The political economy of monetary institutions. International Organization 56 (4): 697–723.Google Scholar
- Bohle, D. and Greskovits, B. (2012) Capitalist Diversity on Europe’s Periphery. Ithaca, NY: Cornell University Press.Google Scholar
- Connolly, R. (2013) The Economic Sources of Social Order Development in Post-socialist Eastern Europe. London: Routledge.Google Scholar
- Czech Ministry of Finance (2009) Assessment of the fulfilment of the Maastricht convergence criteria and the degree of economic alignment of the Czech Republic with the euro area: A joint document of the Ministry of Finance of the Czech Republic and the Czech National Bank approved by the Government of the Czech Republic on 21 December.Google Scholar
- Czech National Bank (2008a) The Czech Republic’s Updated Euro-Area Accession Strategy: A Joint Document of the Czech Government and the Czech National Bank.Google Scholar
- Czech National Bank (2008b) Assessment of the fulfilment of the Maastricht convergence criteria and the degree of economic alignment of the Czech Republic with the euro area: A joint document of the Ministry of Finance of the Czech Republic and the Czech National Bank approved by the Government of the Czech Republic on 16 December.Google Scholar
- Czech Statistical Office (2010) Election to the chamber of deputies of the parliament of the Czech Republic, held on 28–29 May 2010, http://www.election.cz/pls/ps2010/ps2?xjazyk=EN, accessed 26 September 2010.
- Dandashly, A. and Verdun, A. (forthcoming) Boarding the euro plane: Euro adoption in the Czech Republic and Slovakia. Review of European and Russian Affairs 9.Google Scholar
- Darvas, Z. (2008) The rise and fall of Hungary. The Guardian 29 October.Google Scholar
- De Grauwe, P. and Schnabl, G. (2004) Exchange Rate Regime and Macroeconomic Stability in Central and Eastern Europe. Center for Economic Studies and Ifo Institute, CESIfo Working Paper, No. 1182 April, Munich-Germany.Google Scholar
- Deutsche Welle (2007) The euro is coming to Poland – But when? 13 January.Google Scholar
- Dyson, K. (ed.) (2006) Enlarging the Euro Area: External Empowerment and Domestic Transformation in East Central Europe. Oxford: Oxford University Press.Google Scholar
- Dyson, K. (ed.) (2008) The Euro at 10: Europeanization, Power and Convergence. Oxford: Oxford University Press.Google Scholar
- Dyson, K. and Marcussen, M. (eds.) (2009) Central Banks in the Age of the Euro: Europeanization, Convergence and Power. Oxford: Oxford University Press.Google Scholar
- Dziennik Ustaw (1997) The Constitution of the Republic of Poland as adopted by the National Assembly on 2 April 1997, No. 78, item 483, Warsaw, Poland.Google Scholar
- Economic Intelligence Unit (EIU) (2008) Hungary: Country Profile. London.Google Scholar
- ERSTE (2008) Euro Adoption in CEE: Special Report. May, http://www.slsp.sk/downloads/EN_Specialny_komentar/2008/20080508_special_report_euro_svk.pdf, accessed 2 March 2009.
- EUbusiness (2010) Hungary ‘had to introduce bank tax’. 13 September.Google Scholar
- EUobserver (2008) Crisis will delay Czech euro adoption, says bank chief. 13 October.Google Scholar
- EurActiv (2005) The race for the euro: Hungary running out of steam? 21 April.Google Scholar
- EurActiv (2007) Hungary plans euro adoption road map. 22 February.Google Scholar
- EurActiv (2014) Prague pledges to do ‘everything’ to join euro in four years. By Petr Drulák, 11 September.Google Scholar
- European Commission (2007) Introduction of the Euro in the New Member States: Summary. Flash Eurobarometer 214, Brussels, Belgium.Google Scholar
- European Commission (2008) Introduction of the Euro in the New Member States: Analytical Report. Eurobarometer, Brussels, Belgium.Google Scholar
- European Commission (2009) Introduction of the Euro in the New Member States: Analytical Report. Eurobarometer, Brussels, Belgium.Google Scholar
- European Commission (2010) Introduction of the Euro in the New Member States: Analytical Report. Eurobarometer, Brussels, Belgium.Google Scholar
- European Commission (2011) European economic forecast Autumn 2011. In: European Economy. Brussels, Belgium, p. 6.Google Scholar
- European Commission (2015) Introduction of the euro in the member states that have not yet adopted the common currency. In: Flash Eurobarometer, 418, Brussels, Belgium.Google Scholar
- Eurostat Data (2015) http://ec.europa.eu/eurostat/data/database, accessed 15 November.
- Fazekas, K. (2004) Low participation and regional inequalities – Interrelated features of the Hungarian labor market, case study. Paper presented at the conference Demographic Changes and Labor Markets in Transition Economies, organized by the Institute of Economic Research (IER), Hitotsubashi University; 20–21 February, Tokyo, Japan.Google Scholar
- Feldstein, M. (2011) Vaclav Klaus and the Euro. Cambridge, MA, March, http://www.nber.org/feldstein/essaysinhonorofVaclavKlaus.pdf, accessed 6 December 2011.
- Financial Times (2010a) Has Hungary’s PM done enough? 9 June.Google Scholar
- Financial Times (2010b) Marek Belka tapped to be Poland’s new central bank governor. 27 May.Google Scholar
- Financial Times (2015) Euro entry looms large in Polish election campaign. 20 July.Google Scholar
- Greskovits, B. (2006) The first shall be the last? Hungary’s road to EMU. In: K. Dyson (ed.) Enlarging the Euro Area: External Empowerment and Domestic Transformation in East Central Europe. Oxford: Oxford University Press, pp. 178–196.Google Scholar
- Greskovits, B. (2008) Hungary and Slovakia: Compliance and its discontent. In: K. Dyson (ed.) The Euro at 10: Europeanization, Power and Convergence. Oxford: Oxford University Press, pp. 274–291.Google Scholar
- Geršl, A. (2006) Political pressure on central banks: The case of the Czech National Bank. Finance a úvěr–Czech Journal of Economics and Finance 56 (1/2): 18–39.Google Scholar
- Hanley, S. (2007) The New Right in the New Europe: Czech Transformation and Right-Wing Politics, 1998–2006. London and New York: Routledge.Google Scholar
- Horvath, J. (2009) Global financial crisis: Implications for the Hungarian and the Slovak economy. In: A. Dandashly, A. Surdej and H.T. Właszczuk (eds.) Global Financial Crisis and Euro Zone Enlargement. Krakow, Poland: Adam Marszalek Publishing House, pp. 47–59.Google Scholar
- Klaus, V. (2003) The future of Euro: A view of a concerned outsider. Prague, http://www.klaus.cz/clanky/439, accessed 4 December 2014.
- Král, D. (2010) The Czech 2010 elections: Beginning of a new political era? European Policies Initiative. Policy Brief, 22 June.Google Scholar
- Lipschitz, L., Lane, T. and Mourmouras, A. (2005) Real convergence, capital flows and monetary policy: Notes on the European transition countries. In: S. Schadler (ed.) Euro Adoption in Central and Eastern Europe: Opportunities and Challenges. Washington DC: International Monetary Fund (IMF), pp. 61–69.Google Scholar
- Magyar Nemzeti Bank (2001) Act LVIII of 2001 on the Magyar Nemseti Bank, Budapest, Hungary.Google Scholar
- Magyar Nemzeti Bank (2004) Public information ‘ECB: No need for amendment of the MNB Act’, http://english.mnb.hu/Engine.aspx?page=mnben_sajtokozlemenyek&ContentID=6235.
- Myant, M. and Drahokoupil, J. (2011) Transition Economies: Political Economy in Russia, Eastern Europe, and Central Asia. Hoboken, NJ: John Wiley.Google Scholar
- Olsen, J.P. (2002) The many faces of Europeanization. JCMS: Journal of Common Market Studies 40 (4): 921–952.Google Scholar
- Polański, Z. (2004b) Poland and the European Union: The monetary policy dimension. Monetary policy before Poland’s accession to the European Union. Polityka Pieniężna-Bank I Kredyt, May.Google Scholar
- Prague Daily Monitor (2009) Czech euro adoption date to be set in Nov. 2 January.Google Scholar
- Prague Post (2014) A decade after EU entry, the Czech Republic has yet to take steps toward the single currency. 16 August.Google Scholar
- Prague Post (2015a) Sobotka: Government won’t set euro date. 31 May.Google Scholar
- Prague Post (2015b) Central Bank Governor speaks out on euro adoption. 21 April.Google Scholar
- Reuters (2015) Multiculturalism does not work in Hungary, says Orban. 3 June.Google Scholar
- Schadler, S. (ed.) (2005) Euro Adoption in Central and Eastern Europe: Opportunities and Challenges. Washington DC: IMF.Google Scholar
- The Economist (2013) Orban’s soldiers: The government entrenches its power, to the European Union’s dismay. 9 March.Google Scholar
- The Wall Street Journal (2009) Poland’s premier fights with Central Bank. Tusk’s plan to save zloty runs counter to Euro-skeptics. 20 February.Google Scholar
- The Wall Street Journal (2014a) Hungary’s new notes speak of late conversion to euro. 1 September.Google Scholar
- The Wall Street Journal (2014b) Polish leaders hope debate can change perception of euro. 10 October.Google Scholar
- Visegrad (2010) Euro versus national currencies in Visegrad countries, 28 May, http://www.visegrad.info/monetary-policy--euro/factsheet/euro-versus-national-currencies-in-visegrad-countries.html, accessed 9 December 2015.
- Warsaw Voice (2006) Balcerowicz under fire. 22 March.Google Scholar
- Willett, T.D., Chiu, E.M.C.P. and Walter, S. (2014) Fixed exchange rate regimes and financial markets as sources of macroeconomic discipline. In: T. Oatley and W.K. Winecoff (eds.) Handbook of International Political Economy. London: Edward Elgar, pp. 285–303.Google Scholar
- Zubek, R. (2006) Poland: Unbalanced domestic leadership in negotiating fit. In: K. Dyson (ed.) Enlarging the Euro Area: External Empowerment and Domestic Transformation in East Central Europe. Oxford: Oxford University Press, pp. 197–214.Google Scholar
- Zubek, R. (2008) Poland: From pacesetter to semi-permanent outsider. In: K. Dyson (ed.) The Euro at 10: Europeanization, Power and Convergence. Oxford: Oxford University Press, pp. 292–306.Google Scholar