Early euro adoption 'bad idea' for Eastern EU[fr][de] 

A leaked IMF report, cited by the Financial Times on Monday (6 April), stated that crisis-hit European Union states in Central and Eastern Europe should consider scrapping their currencies in favour of the euro, even without formally joining the euro zone. 

"Without euroisation, addressing the foreign debt currency overhang would require massive domestic retrenchment in some countries, against growing political resistance," says the confidential document, drafted a month ago. 

But experts from the Eastern European EU members appeared to be united in rejecting the idea. 

Jan Bures, chief economist at Poštovní spořitelna bank, said such a unilateral adoption of the euro would not solve the problem of foreign currency debt, but would merely "ease immediate pressure". 

"You can eradicate exchange rate volatility by adopting the euro. However, this step will not be profitable for you unless you fulfill certain conditions," Bures explained. 

In Hungary, György Barcza from K&H bank said that adopting the euro before meeting the convergence criteria was unrealistic and would increase risks to both Hungary and the euro zone, the Hungarian press reported. Barcza added that his country had lost credibility with regard to the introduction of the euro, a condition that that is reflected in the significant difference between the long-term rates of the forint and the euro. 

In Romania, Adrian Vasilescu, counsellor to the national bank governor, stated that abruptly scrapping the national currency would be a "big mistake", TV channel Realitatea reported. He warned that such a move could open new problems, boost inflation and hike prices. 

Tomas Bartovsky, press spokesman for the Czech Ministry of Industry and Trade, said he had taken note of the report's publication, but added that he does not expect the conditions of the EU's Stability and Growth Pact to be changed. 

Commission plays down IMF report 

In the meantime, the EU played down the importance of the IMF paper and suggested it was obsolete, stressing that the EU had since done a lot for the region to help it fight the global financial crisis. 

"This appears to be an internal report, a one-month-old report. We have no specific comments on the report," a Commission spokesman told a daily news briefing. 

For its part, the European Central Bank stressed that the implementation of the Maastricht criteria remains the main condition for accession to the euro.

Daniel Daianu, Romanian MEP, told EurActiv Romania that the European Parliament has had recently a discussion on the issue of a faster route to enter the euro zone, but he explained that "opinions are diverging". 

"On one hand, adopting euro means eliminating the exchange rate risk. On the other hand, as we can learn from the other countries' experiences, like Greece, Portugal, Spain, the countries who joined the euro zone cannot use the exchange rate as a mechanism of correction for some economic imbalances. All the corrections must then base on the markets' movement, the flexibility of goods and services, the markets, and the labour market flexibility. If there is not enough flexibility, this would lead inevitably to a huge pressure on the public budget. The euro zone, in this respect, has an important weakness, and this is the reason we have the Stability and Growth pact which asks the states to have public deficit not bigger than 3% - as an average on the economic cycle. We also see that countries like Germany and Holland are now reluctant to receive new members in the euro zone."

Daianu concluded that adopting the euro earlier is "neither a "Deus ex machina", nor a universal cure". 

"On the long term, even being inside [the eurozone], we will face the big problem of productivity/competitiveness of the Romanian economy," he argued.