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Diverging policies of central European countries towards introduction of Euro and debt crisis in
several member states of the EU threatening single currency
Filip Křepelka
filip.krepelka@law.muni.cz

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Justification of single currency
nEuropean Communities and the European Union (EC/EU) serve(d) economic integration. nBasic economic
freedoms enabled immense internal trade in goods among member states and significant movement of
workforce, capital and services.
nCross-border payments are necessary complement.
nIf different currencies exist, exchange is necessary.
nTransaction costs emerge (1% GDP and more)
nEven efforts to stabilize exchange rates did (formerly Brettonwoods system, later interventions of
central banks) not exclude risks of change for traders.
nSingle currency removes these costs and risks.

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Requirements for introduction of Euro
nTreaty on the European Union (Maastricht Treaty) formulated requirements on the member states:
nInstitutional criteria
n(1) independence of national central bank
nMonetary:
n(2) convergence of inflation (low inflation +1.5%)
n(3) convergence of interest rates (+2% above lowest)
n(4) stable exchange rate of national currency
nFiscal: confirmed as Stability and Growth Pact
n(5) low deficit of public budgets less 3%
n(6) limited indebtedness of government – less 60%GDP
n

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Start of Euro and Rise of Eurozone
n1993-1998 preparatory phase.
n1999 – introduction of Euro in formal sense (accounting, banks, cashless payments).
n2002 – introduction of Euro banknotes and coins.
nNational banknotes and coins were withdrawn and Euro put into circulation. nTotal continuity of
pecuniary obligation, price to be calculated with fixed coeficient (quasi exchange rate) nGradual
enlargement of Eurozone from 11 to 19 (+some other countries).
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Debt crisis since 2010
nExcessive public indebtedness: Greece, Portugal, Ireland, Cyprus, also Spain, Italy… nSharply
increasing interest required from investors destabilized situation. nRescue loans were gradually
institutionalized (EFSM, EFSF and now European Stability Mechanism). nEnhancing missing discipline
(Fiscal Pact, six-pack, debt brakes expected, supranational control).
nExpansive monetary policy of the ECB and Eurosystem
n„Haircut“ (Greece), project of banking union.
nDemands for mutualization of debts (Eurobonds) and rating agencies control failed.
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Euro questioned
nIntroduction was smooth. Maintenance of single currency is more difficult than many expected.
nWhat caused crisis?  Welfare state? Corruption? Reckless lending and borrowing by public and
private hand? And is Eurozone optimal currency area?   nIs bail-out indebted member states
necessary? Can discipline function with bail-out? Eventual collapse of Eurozone (domino effect)?
Threat to EU in general? nEffects on the member states and on the EU (intergovernmentalism, role
European Parliament and the Commission), collapsing coalitions, early elections, rise of populist
and sceptic parties, interethnic distrust within EU
Zápatí prezentace.
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Economic aspects of adoption/retention
nSmaller member states (15M) – Slovenia, Slovakia, Estonia, Latvia (since 2015 Lithuania) adopted
Euro. nLarger states (58M) - Poland, Czechia, Hungary (+Romania, Bulgaria - 30 M) retained their
currencies. nCan it be explained with size of national economies and related proportion of
international trade? nDoes introduced Euro contribute to economic growth or is insignificant
(Poland v. Slovakia v. Czechia v. Hungary v. Baltic countries etc.)? nAre economies of retentionist
member states already „euroized“? To what extent?
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Political aspects of adoption/retention
nVarious positions and attitudes of politicians, experts and population towards Euro. Impact of
Eurocrisis? nSlovakia: effort to show success in integration, Slovaks are generally satisfied
despite burden resulting from rescue loans nCzechia: „Euro-sceptical“ ODS in decline now, new
coalition ČSSD+ANO+KDU-ČSL pays lip service to Eur, Population is, however, sceptical.
Traditionally stable koruna allows dreaming about quasi Swiss-Franc. nWhat about Poland (elites
more engaged in introduction than population) – important for Czechia and Hungary (opposite)?
nNo pressure from EU to adopt. Eurocrisis?
n
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Preparations for introduction
n„Administration as usual“. Eurocracy and national bureaucracy prepares and competent institutions
adopt reports, evaluations and projects. nTechnical aspects analyzed and introduction would be thus
very well prepared and surely carried.  nNon-compliance is identified in several criteria,
especially deficit (5), unstable exchange rate (4) and even institutions (1).   nAbility to
estimate long-term suitability of Euro is lower. Nevertheless, even economists in Eurozone and
globally are uncapable to predict development.
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Legal aspects of Euro and its introduction
nComparatively detailed framework for monetary union with deficient „economic“ union (what was,
could be and shall be meaning of this adjective). nDebt crisis led to reinterpretation, ignorance
of rules (as inapplicable and dangerous), changes of legislation confirming new measures.
nFragility of supranational EU law shown with questioning of constitutionality of measures
(Germany).  nNew member states are formally obliged to introduce Euro (only Great Britain and
Denmark opted-out).
nCan substantial change of circumstances be invoked?
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