Since Poland's accession to the European Union in 2004, the issue of replacing the gold by the euro has remained the subject of heated debates. Despite the Treaty obligations, Poland is in no hurry to adopt the single currency. Why? fresh statements by representatives of the National Bank of Poland (NBP) shed fresh light on this issue.
Independence of monetary policy as a key to success
Marta Kightley, the first Vice president of the NBP, expressed her firm opinion on the possible adoption of the euro by Poland at the LSE Polish economical Forum in London. She stressed that maintaining an independent monetary policy is essential for further dynamic improvement of the country. In her opinion, it is thanks to its autonomy in shaping monetary policy that Poland has achieved awesome economical results in fresh years.
Kightley pointed out that exporters do not treat currency or exchange rate as a problem. In the last 2 decades, the share of Polish exports in the global marketplace It doubled., which shows the global competitiveness of our companies. This proves that the current monetary strategy favours exporters and supports their expansion.
Is the lower interest rates of the euro area a benefit for Poland?
One of the arguments of the supporters of adopting the euro is the anticipation of utilizing lower interest rates the euro area. However, Kightley powerfully rejects this argument, indicating that during a period erstwhile interest rates in the euro area were negative, Poland recorded higher economical growth. That suggests that low interest rate does not warrant dynamic development, and independent monetary policy allows economical tools to be better adapted to the circumstantial needs of the country.
Political aspects of the adoption of the euro
The introduction of the euro is not only an economical decision but besides a political decision. Kightley notes that Euro area membership does not find the country's position in the European Union. An example is Slovakia, which, despite the adoption of the euro, does not play a greater function than the Czech Republic, which remains with its currency. It shows that the size of the economy and its importance in the EU do not depend on the currency, but from real economical indicators and country policies.
Convergence criteria – is Poland ready?
In order to adopt the euro, Poland must meet the alleged convergence criteria set out in the Maastricht Treaty. These include:
- Price stability: Inflation must not exceed by more than 1,5 percent points the average inflation of the 3 EU countries with the lowest inflation.
- Exchange rate stability: Participation in ERM II for at least 2 years without major tensions.
- Fiscal stability: The budget deficit must not exceed 3% of GDP and public debt 60% of GDP.
- Interest rate stability: Long-term interest rates shall not exceed by more than 2 percent points the average interest rates of the 3 EU countries with the lowest inflation.
Currently Poland does not meet all these criteria, which represents a crucial obstacle to the adoption of the euro. The Ministry of Finance in its study ‘Convergence Monitor with economical and Monetary Union’ indicates that Poland's membership of the euro area could be a origin of economical disturbance. This suggests that before deciding to adopt the euro, Poland must accomplish greater stableness and compliance with the required criteria.
Social sentiments towards the euro
The opinions of Poles on the adoption of the euro are divided. A part of the population is afraid of rising prices and losing control of national monetary policy. Others see a chance in the euro More integration into Europe and economic stability. However, the deficiency of clear public support makes politicians approach this subject cautiously, avoiding unambiguous declarations.
Given the current position of the NBP and the economical situation, it appears that Poland is not ready to accept the euro yet. The precedence remains maintaining an independent monetary policyto respond flexibly to economical challenges.
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Will Poland gotta accept the Euro? National Vice president of the Bank of Poland spoke
