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Should Czechia start taking steps to adopt Euro? Even the ministries can’t agree…

Czech Republic might be ready to start preparations next year, but government is divided.

In a yet unpublished document, the Czech government in coordination with the National Bank anticipate, that the Czech economy should meet three of the EUs Maastricht criteria for joining the Eurozone soon. The economy should be in line with the required values for the state of public finances, convergence of interest rates and price stability next year.

That would mean that Czechia would be fit to try and meet the fourth and final criterium, the exchange rate stability. This value is tested in what is called the ERM II mechanism, in which the domestic exchange rate must be able to move only within a narrow band in relation to the Euro for two years. While all facts point to that fact that Czechia is ready to join ERM II, the document advises against it.

However, the government is not aligned on this issue, as one of the coalition parties, STAN, including the Minister for European Affairs, Mr. Martin Dvořák, urges the government to move ahead and set a date for joining ERM II. The government’s disagreement mirrors the divided public opinion and highlights that joining the Eurozone is a political question in Czechia, not economic. All the while, Czechia is bound to adopt Euro one day, to which the country agreed upon joining the EU. The only question remains, when, and why not now?

Prepared by the Czech Trade United Kingdom & Ireland team
Source: ČTK