The Eurozone Enlargement: Prospect of New EU Member States for Euro Adoption

Yoji Koyama (Editor)
Niigata University, Niigata, Japan

Series: European Political, Economic, and Security Issues
BISAC: POL058000

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In May 2004, eight countries of Central and Eastern Europe were admitted to the European Union (EU). In January 2007, Romania and Bulgaria, and in July 2013, Croatia were admitted to the EU. These new EU member states (NMS) are not given the right to opt out as the UK and Denmark have, and they are obligated to adopt the Euro. Among eleven new member states, five countries adopted the euro: first Slovenia (2007), followed by Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015). This book considers the problems of the Eurozone Enlargement by reviewing the experiences of NMS which have adopted the Euro and considering prospects of NMS which have not yet adopted the Euro. The book is divided into two parts. Part One mainly deals with NMS which have already adopted the Euro and takes a closer look at their experiences.

Chapter One explains the evolution and the current situation of the EMU in order to get an overall picture of the Eurozone. Chapter Two discusses Slovenia’s experiences of the euro adoption and its lessons. Chapter Three discusses the experiences of Slovakia which adopted the euro in January 2009 exhibiting, in contrast to Slovenia, a favorable performance. Although having seriously suffered from the 2008 global financial crisis, the Baltic States have recovered quickly. Chapter Four discusses what kind of lessons could be drawn from the experiences of the Eurozone NMS, focusing on Latvia and Slovakia. Part Two deals with the NMS which have not adopted the Euro yet, but are expected to. Chapter Five not only discusses Poland’s prospects for Euro adoption but also serves as an introduction to Part Two as a whole.

It deals with not only the criteria which should be met by prospective Eurozone member NMS (i.e. explicit Maastricht convergence criteria), but also the criteria of implicit and substantial convergence (i.e. The Czech Republic and Slovakia maintaining close economic relations in spite of their separation in 1993). Slovakia adopted the Euro in January 2009 while the Czech Republic has not yet adopted it. Chapter Six discusses the current situation and challenges of the Czech Republic in comparison with Slovakia. Chapter Seven analyzes the Hungarian situation both from a perspective of a comparison with other CEE countries, and from a historical perspective of its long-term transition process. Chapter Eight considers challenges facing Croatia, which has an industrial structure quite similar to Greece. Among prospective Eurozone member states, Romania is the only one country which has its target date for Euro-adoption of January 1, 2019. Chapter Nine considers Romania’s current situation and its challenges. Chapter Ten discusses challenges facing Bulgaria, which has maintained the currency board system. Although the Western Balkan countries are not discussed directly, this book has important implications for them. The authors of the book include five economists from Central Eastern Europe and three economists from Japan. This book is a product of international academic cooperation between Europe and Asia.

Preface

Chapter 1. Current Financial Situations and EMU Evolution
Yusuke Matsuzawa (Associate Professor at Bunri University of Hospitality, Saitama, Japan)

Chapter 2. From Dinar to Tolar and From Tolar to Euro: The Slovenian Experience
Jože Mencinger (EIPF and University of Ljubljana, Slovenia)

Chapter 3. Slovakia: Adoption of the Euro and After
Yusuke Matsuzawa (Associate Professor at Bunri University of Hospitality, Saitama, Japan)

Chapter 4. Some Lessons from the Successful Euro Adoption by the Two CEE states
Hiroshi Tanaka (Professor at Ritsumeikan University, School of Economics, Kyoto, Japan)

Chapter 5. The Institutional Underpinnings of the Prospective Euro Adoption in Poland
Ryszard Rapacki (Professor and Head, Department of Economics, Collegium of World Economy, Warsaw School of Economics, Warsaw, Poland)

Chapter 6. Czech Republic - The Present Situation of a Prospective Eurozone Member: Current Challenges during time of Creative Destruction (A Comparison with Slovakia as a Eurozone Member)
Michal Mejstrik (Professor at Charles University, Praha, Czech Republic)

Chapter 7. Hungary’s Divergent Way to Adopt the Euro
Hiroshi Tanaka (Professor at Ritsumeikan University, School of Economics, Kyoto, Japan)

Chapter 8. Croatia’s Challenges Regarding the Adoption of the Euro
Yoji Koyama (Professor Emeritus at Niigata University, Niigata, Japan)

Chapter 9. Euro Adoption in Romania: Moving Faster or Moving Slower?
Gabriela Drãgan (Faculty of International Business and Economics, Bucharest Economic University, Bucharest, Romania, and others)

Chapter 10. Euro Adoption in Bulgaria: Opportunities and Challenges
Vanya Ivanova (Assistant Professor, Department of Finance, University of National and World Economy, Bulgaria)

Conclusion

Index

“This volume is as a result of international intellectual endeavours aimed to review the experiences of the New Member States (NMS) which adopted the Euro (EMU members too) and which are non-euro members. The international research consortium is composed of leading scholars from various Japanese universities and from similar institutions in the NMS (Bulgaria, Czech Republic, Poland, Romania, Slovakia and Slovenia). The authors represent a variety of approaches which are helping to better understand both the expectations and real experiences with the Euro in these countries. Particular intellectual strength of this book is the following: the contributors’ ambition is to look beyond the narrow monetary policy of the EU (e.g. financial disequilibrium, etc.) and focus on the difficulties of the real economy (i.e. macroeconomic stability, industrial policy, etc.) In this respect it is worth to stress the concluding remark of the editor: “In order to promote the economic development in EU periphery including NMS, wisdom which should replace austerity measures is urgently required. Without this, the Euro adoption by non-euro NMS will not make substantial progress.” This book is essential reading for students, policy-makers, journalists, academics or anyone with an interest in the ongoing changes and the related tensions within the European Union." - Dr. Mako Csaba, Institute of Sociology - Centre for Social Sciences, Hungarian Academy of Sciences

“The book gives a comprehensive outlook on prospects of the new EU member states for Euro adoption. The Eurozone debt crisis has created hesitations on further enlargement of the Euro area, even if all the EU members (excluding the opt out -countries United Kingdom and Denmark) are basically supposed to join the Euro. New member states have different approaches to the issue: five of them have already adopted the Euro and some hope to join soon, but many prefer a wait and see strategy. Austerity measures used in resolving the debt crisis discourage new member states to join. The book is about a fundamental issue of the European integration process: is the EU capable in holding the principles of the Economic and Monetary Union in the future." - Paavo Okko, Professor emeritus of Economics at Turku School of Economics at University of Turku

“Narratives of the financial histories of different countries around the world – be it small or large – contribute to the refinement of existing economic theories. This important book focuses on a highly topical issue of the enlarged European Union: the variety of approaches to the monetary integration of countries being on different levels of economic and institutional development and having different political tastes concerning the European idea. It is a collection of well-told stories about the sinking optimism and increased cautiousness of some CEEs and the eagerness of others on their long way to the Euro-zone." - Károly Fazekas, General Director, Center of Economic and Regional Science, Budapest, Hungary

“The book „Eurozone Enlargement: the Prospect of New EU Member States for Euro Adoption” is a comprehensive resource for all with an informational and research interest in the field of European integration. Especially in recent years, when Europe has been experiencing multi-dimensional crises – from finance to refugees – it is more than usually important to understand the integration phenomenon, and this book assists the reader´s effort to do so. The book initially explores current financial situations and EMU evolutions, an apposite entry to its theme. Subsequently, it brings detailed information about the adoption of the euro in Slovenia, the Slovak Republic and Latvia- comparing the periods before and after euro adoption. It is also a valuable source on the preparations for euro adoption of other Central and Eastern European countries, i.e. the Czech Republic, Poland, Hungary, Rumania, Bulgaria and Croatia, which vary in their closeness to or distance from euro adoption. This book is recommended for all seeking to understand the processes behind European integration and to analyse the proc and cons of Europe´s great currency project." - Professor Lubos Komarek, Director of Monetary and Statistics Department, External Economic Relations Division, the Czech National Bank and Professor at Technical University of Ostrava

“This book considers problems of a prospect of the Eurozone enlargement of the CEE countries. Reviewing experiences of the five countries which adopted the euro, authors consider ways and means for other CEE countries to enter the Eurozone. As they looked at the Greek crisis and the other southern European crises, their analyses lead to a recommendation to adopt real convergence criteria such as GDP per capita, instead of the Maastricht nominal criteria. So far we have concentrated our attention on the Eurozone inside only. This book is very useful to expand our eyesight and stimulates our thinking of the future of the Eurozone in the next decade." - Professor SOKO TANAKA, Jean Monnet chair ad personam, former President of the Japan Society of International Economics and former President of the European Union Studies Association – Japan

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Audience: Researchers, graduate students in the fields of EU studies, international finance, international trade and area studies of Central and Eastern Europe, businessmen in finance and foreign trade, businessmen planning to expand their business into CEECs, etc. Economists in research sections in international organization such as the European Commission, the European Central Bank, the IMF, the World Bank, etc. , central banks in the EU member states as well as other advanced countries, and credit rating companies might be interested in this book.

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