Membership in the Reforming Euro Area: a Central-Eastern European Perspective

The perspective for introducing the euro in the Central and Eastern European (CEE) countries, including Poland, was the main subject of the scientific workshop “Membership in the Reforming Euro Area: The CEE Perspective”, which took place on the 25 June 2013 at the Polish Institute of International Affairs (PISM) in Warsaw. The event was organised as part of the project “Rastanews. Macro-Risk Assessment and Stabilisation Policies with New Early Warning Signals”, which is being conducted within the scope of the European Commission-financed Seventh Framework Programme.

A policy report prepared by PISM analysts Agata Gostyńska, Paweł Tokarski, Patryk Toporowski and Damian Wnukowski includes not only a record of the most important elements touched on during the discussion but also a set of conclusions and recommendations on concrete measures that could ensure benefits for the CEE states from adopting the common currency and the efficient operation of the eurozone in the future.

The report indicates that the existing economic management mechanisms in the European Monetary Union (EMU) were ill-suited to the challenges the eurozone currently has encountered, above all the significant discrepancies in the level of competitiveness between Member State economies. Moreover, the steps taken to sustain the stability of public finances have turned out to be insufficient in the face of the dynamic development of the financial markets. Economic and fiscal integration within EMU is still not deep enough, a condition that implies a lack of belief in the irreversibility of the common currency project. The authors point out that the CEE countries, including Poland, should undertake the preparation of a precise cost-benefit analysis concerning euro adoption, taking into consideration the changing architecture and situation in the eurozone. Poland and the other “pre-in” countries should also continue the real economic convergence process with the EMU, including increasing competitiveness based on innovations that will be beneficial in the long term regardless of the political decision on euro area membership.