Hungary sees possibility for adopting the euro by 2020

By bne IntelliNews July 19, 2016

Hungary could adapt the euro by the end of the decade, the country’s economy minister said in comments published on July 19.

As some core Western Europe members may eventually push for more integration following Brexit, Hungary – together with the Czech Republic and Poland – is likely to face a choice whether to adopt the euro and become one of the inner core countries of a possible “two-speed Europe”, or to stay outside the Eurozone and to become part of a new Eastern periphery.

The Hungarian government has been planning since 2003 to replace the forint with the euro, but has not set a target date for joining the Eurozone. In recent years, Prime Minister Viktor Orban’s right-wing government has become less enthusiastic about adopting the single European currency, fearing that the move might entail giving up parts of Hungary’s national sovereignty.

On July 19, however, Economy Minister Mihaly Varga talked again about the possible introduction of the euro. “If economic trends are long-lasting, if we move closer to the European Union’s developmental average, and if our productivity continues to improve, I don’t consider [eurozone] accession groundless by the end of the decade,” Varga told local Magyar Hirlap.

At the same time, he added that it still remains a question “from the point of view of national sovereignty whether Hungary needs the euro”.

Varga pointed out that according to the European Commission’s and European Central Bank’s latest convergence report, Hungary fails to meet only one of the euro adoption criteria. Hungary has not joined the Exchange Rate Mechanism (ERM-II system), which is considered as the waiting room for euro adoption.

 

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