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Law and Justice MPs asked the government about Poland’s entry into the euro zone. The questions were answered by the Ministry of Finance.
The authors of the interpellation on Poland’s entry into the euro zone are members of the Law and Justice Parliamentary Club. Parliamentarians asked, among others: whether and possibly when the government plans Poland’s entry into the euro zone and whether the Ministry of Finance has analyzed the risks related to the adoption of the common currency.
The answer was provided by Deputy Minister of Finance Jurand Drop.
Deputy Minister of Finance about the euro in Poland
The deputy head of the Ministry of Finance pointed out that as a member state of the European Union, “Poland is obliged to adopt the common currency after meeting the convergence criteria resulting from the Maastricht Treaty.” The so-called convergence criteria are requirements that countries should meet before entering the euro zone. They concern: inflation, public deficit and debt, interest rates and fluctuations in the exchange rate of the national currency against the euro.
Drop emphasized that the Ministry of Finance monitors the level of fulfillment of the convergence criteria. “Current estimates of nominal convergence indicate that the following criteria remain unfulfilled: price stability, interest rates and exchange rate stability (due to the fact that the zloty has not been included in the ERM II mechanism),” explained the deputy minister.
ERM II was created on 1 January 1999 as the successor to the original ERM to ensure that exchange rate fluctuations between the euro and other EU currencies did not disturb economic stability in the single market and to help non-euro area countries prepare for participation in the common currency area . In ERM II, the currency exchange rate is fixed against the euro and can only fluctuate around it within established limits.
In Drop’s opinion, “the differences observed so far in the structure of economies and – to a lesser extent – in the course of business cycles between highly developed countries and Poland are significant, but characteristic of the catching-up process.”
However, the Deputy Minister of Finance emphasized that “the recovery of the economy from the difficult period we have experienced in recent years will be characterized by improved macroeconomic stability and, as a consequence, will bring closer the prospect of meeting the nominal convergence criteria and increasing the degree of real convergence of Poland with the euro area.”
No date
For now, there is no approximate date for the introduction of the euro in Poland. “The priority of Polish economic policy is to strengthen the potential and competitiveness of the economy, which will contribute to lasting convergence. Stabilization of the economic situation, necessary for a reliable assessment of the prospects for meeting the convergence criteria, is a condition for setting a reliable date for Poland’s adoption of the euro. This is due to, among others, “due to the fact that some of the convergence criteria are conditional on the situation in other EU countries and market conditions,” emphasized the deputy head of the Ministry of Finance.
Additionally – as he pointed out – “each country must also meet the legal criterion, i.e. fully adapt its law to the requirements of participation in the euro zone.”
In the case of Poland, this requires, among others, amending the Constitution and amending a number of detailed provisions.
“The adoption of the European currency requires achieving an appropriate level of convergence”
The deputy minister also referred to the risks for the Polish economy resulting from the adoption of the common currency. “The threats related to the introduction of the euro, including the consequences of giving up the freedom to shape monetary and exchange rate policy, should be assessed in a broader context and in relation to the opportunities and benefits arising from this decision. Thanks to the ongoing processes of economic convergence, the balance of opportunities and threats will improve,” he said. Jurand Drop.
He emphasized that the examples of other countries that entered the euro zone and experienced negative economic effects – mainly Southern European countries – show that “adoption of the European currency requires achieving an appropriate level of nominal and real convergence and appropriate institutional preparation of the economy, including carrying out appropriate structural reforms.
As he noted, “these examples do not prove the negative effects of adopting the common currency, but the consequences of insufficient preparation or failure by these countries to comply with the economic criteria required from members of the zone, e.g. in relation to excessive national debt.”
The deputy head of the Ministry of Finance pointed out that the countries that introduced the euro later “have drawn conclusions from their experience and have been more effective in preventing, for example, the risk of price increases as a result of the currency change.”
“The experience of countries that adopted the euro after 2009, e.g. Slovakia, Estonia and Latvia, shows that the size of the above phenomenon was insignificant. In the case of Croatia, which adopted the euro on January 1, 2023, preliminary estimates also do not indicate that the change of currency to euro had a significant impact on prices and consumer perception of prices,” we read in response to the interpellation.
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