Political and policy dilemmas of euro adoption in CEE countries: What next when crisis hits?

Abstract

Successive crises and shifts in geopolitics necessitate a more coherent Europe, with the euro as a key instrument, yet the enlargement of the euro area is unfinished. The paper reconstructs diverging trends in non-EA countries, and considers the motivations of key stakeholders in countries without commitment to enter. The approach applied is dual: we reconsider economic arguments of a currency reform and conduct political economy analysis with the underlying hypothesis that euro adoption, for businesses, is a cost/benefit issue, while for governments, parties, and voters it is a sovereignty issue with cost/benefit aspects attached. The authors conclude that macroeconomic and business considerations would support Eurozone entry in all CEE countries concerned. As for key stakeholders, society and the business community support the euro, but particular government interests are at stake. Post-pandemic realities would reconfirm rational arguments for euro entry; to make that happen, economic nationalist and state developmental concepts need be discarded.