When will Hungary introduce the euro and what effect will it possibly have?
While many believe that switching to the euro will cure an endless list of problems in a country, it is not that simple. Surely, it has many benefits; a common European currency can help align economies, level the playing field in local markets, and boost global influence. However, sometimes adopting the euro can cause more harm than good. Thus, Hungary should be highly tactical and considerate about its introduction. Here is what experts say.
A myriad of advantages or a huge backlash?
As Pénzcentrum writes, many view the euro as a saviour. The advantages it brings, like aiding the development of countries and fostering fair competition in markets, are undeniable. However, it comes with its drawbacks, notably the diminishing autonomy of national economies and its impact on monetary policy. Predicting how these consequences will unfold is a complex task. Thus, it leaves economic and financial decision-makers with ‘the acid test’. This has been evident in the experiences of two neighbouring countries, Croatia and Slovakia. It also sheds light on the intricate reasons behind the delayed adoption of the euro in Hungary.
Will Hungary introduce the euro?
In contemplating the matter of autonomy, a pressing question emerges: when will Hungary witness the advent of the euro, affording us the prospect of sustaining our economic catch-up endeavours under its auspices? At the moment, the outlook appears affirmative, yet the commencement of this transformative era remains veiled in uncertainty. A conspicuous lack of clarity surrounds the timeline for the euro’s introduction. Oddly, only Poland is in a similar situation as Hungary. Romania and the Czech Republic are staunch defenders of their respective national currencies. Despite that, they have managed to delineate a date for the euro’s introduction. Presently, this eludes our country.
Providing the right background
The Hungarian National Bank (MNB) aims to join the eurozone with Hungary being a well-prepared, competitive economy, thus ensuring the uninterrupted progress of economic cathing-up under the euro’s umbrella. György Matolcsy, the President of the Hungarian National Bank, has emphasised that Hungary is not currently meeting the necessary criteria for euro introduction. Challenges include difficulties in meeting the nominal Maastricht criteria, particularly in the face of high inflation in recent years. Matolcsy highlighted:
Our inflation is higher, and our long yields are above current limits.
Major changes in the next five years
In addition, Matolcsy also emphasises the importance of learning from the mistakes of other countries. For instance, Slovakia and Mediterranean countries provide a cautionary tale. Meanwhile Baltic countries, with the right amount of patience and preparation, have been able to successfully catch up with the euro.
Matolcsy affirmed the Hungarian National Bank’s dedication to adopting the euro. He is confident that with appropriate economic strategies, the necessary level of development for a successful and secure euro introduction could be attained in the medium term. Notably, in financial parlance, the medium term spans one to five years. Matolcsy envisions that the optimal scenario for Hungary’s adoption of the euro could materialise before 2030.
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