Euro adoption in the Czech Republic, Hungary and Poland: Laggards by default and laggards by choice

Abstract:

How can we explain the politics of euro adoption in the Czech Republic, Hungary and Poland? How did the euro crisis influence their positions regarding euro adoption?

This article builds on the domestic politics literature and argues:
(i) countries that had joined the Exchange Rate Mechanism-2 early had an easier time adopting the euro compared with those that did not;
(ii) having a pro-euro government is a necessary but not sufficient condition to adopt the euro;
(iii) the political ideology of the ruling elites is important;
(iv) the existence of veto points in the domestic political system influences the entire process;
(v) although the three countries have made central banks technically independent, the appointment process remains highly political and complex, which has led to conflicts between the central banks and the governments – negatively influencing euro adoption policies; and
(vi) the issue does not have much salience in public opinion and thus does not usually feature high on the agenda of the political elites in the three countries.

These three countries to date have not adopted the euro for various domestic political reasons. They have at different times been laggards by default or laggards by choice.