‘Possible to Enter Eurozone at Any Time, but Impossible to Leave Again’ – Czech Economist

Yesterday, the Czech government supported the country’s Finance Minister Alena Schillerova’s idea to cancel the annual report on the activities of the Coordination Group for the Adoption of the Euro

Sputnik discussed the move with Vladimir Pikora, a famous Czech macroeconomist and financial market analyst.

The National Coordination Group for the Adoption of the Euro was founded in 2005 to prepare the country for the introduction of the common European currency, including the creation of a National Plan for euro adoption, as well as a communication strategy. The group falls under the Czech Ministry of Finance and coordinates the ministry’s activities with other organisations, such as the Czech National Bank, the Ministry of Industry and Trade, the Ministry of Foreign Affairs, and others. Former Vice President of the Czech National Bank Oldrich Dedek was head of the organisation from 2007 to 2017. After his resignation, the position remained unoccupied. In total, the group issued 12 reports on its activities for the period from 2007 to 2018.

As the Ministry of Finance explained, “in a situation where the adoption of the euro is not a priority of the government’s policy statement, no national coordinator for euro adoption is appointed and the coordinating group’s activities are carried out by the Ministry of Finance within its standard agenda, it’s inappropriate to report to the government on any progress in the adoption of the euro”.

“The introduction of the euro is not a topical issue. I find it a waste of resources to publish reports that everyone knows beforehand are useless. I can understand such a move”, Vladimir Pikora told Sputnik.

Despite the Czech Republic meeting all the criteria of the Maastricht Treaty, the government doesn’t plan a specific date for joining the Eurozone. Pikora explains this by the Czechs’ unfavourable attitude towards the new currency [according to last year’s data, 73% of Czechs are against adopting the euro].

“Since there has been a great deal of resistance among voters for the introduction of the euro for many years, nobody has the courage to adopt the European currency. Therefore, it is advantageous for politicians to postpone everything”, the expert said.

“This is not a fundamental issue for the economy. Even without the euro, we have the lowest unemployment rate in the EU [1.9% in June]. I don’t think that if we introduced the euro, we would have a lower unemployment rate. We have more important issues to deal with. While it is possible to enter [the Eurozone] at any time, it is not possible to leave again; so it’s better to keep the door open and not rush”, the economist explained.

According to Pikora, a changeover to the European currency would primarily be felt by traders.

“This will make life easier for exporters and therefore they are lobbying for the euro. On the other hand, importers will feel their quiet life come to an end when, in a very long-term perspective, they could bet on strengthening the koruna and hence cheaper goods and higher sales. For ordinary people, it will not bring great changes. The issue of introducing the euro is overrated and inflated”, the economist concluded.

The views expressed in this article are solely those of Vladimir Pikora and do not necessarily reflect the official position of Sputnik.