THE CZECH REPUBLIC AND THE EURO The Czech Republic´s membership of the European Union involves, among others, the commitment to adopt the single European currency as soon as the required Maastricht criteria have been met. Therefore, in connection with the Czech Republic´s accession to the European Union, the question arises: when will the euro be accepted?
CURRENT SITUATION At the end of 2020, the Czech government adopted a joint recommendation of the Czech Ministry
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2021
The Czech Republic – Your Business Partner in the EU
of Finance and the Czech National Bank not to set a target date for the adoption of the euro for the time being. The decision is based on information contained in the document “Evaluation of the fulfilment of the Maastricht convergence criteria and the degree of the economic harmony of the Czech Republic with the Eurozone”. The common document of the Ministry of Finance and CNB maps out the country´s economic preparedness for the adoption of the euro, which has been evaluated regularly since the Czech Republic joined the European Union in 2004. The document stated that, in 2020, under the unprecedented conditions caused by the COVID-19 pandemic, and the related worldwide economic decline, the Czech Republic is in a position probably to fulfil just one of the Maastricht convergence criteria, specifically the criterion concerning interest rates. The criteria concerning public finance and price stability will not be met. The last criterion, which evaluates participation in the exchange rate mechanism, cannot be formally met, because the Czech Republic
does not participate in it. As regards the level of preparedness of the Czech Republic for accepting the euro, weak spots persist. An obstacle to joining the Currency Union, according to the government, is the unfinished process of real economic convergence of the Czech economy, where in most key indicators, in particular the price and wage levels,
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The answer to this question has been the drafting of a joint document of the Czech government and the Czech National Bank – Strategy of the Process of Accession of the Czech Republic to the Eurozone, adopted in 2003. The document described the economic situation of the Czech Republic in relation to the economic standard of the Eurozone. At the same time, considering the expected pros and cons resulting from the introduction of the single European currency, it outlined the potential strategy of introducing the euro in this country. The years 2009-2010 were mentioned as a potential target for the adoption of the euro, on the assumption that the process of real convergence of the Czech economy and the fulfilment of the required Maastricht criteria continue. In 2006, the Czech government decided to take several steps towards starting preparations for the Czech Republic to adopt the euro. The following are some of the important steps taken by the government in the process of preparations for accepting the euro. An institutional structure was created for the introduction of the euro in the Czech Republic, an important feature of which is to get all the institutions concerned involved in the process. The supreme body is the inter-ministerial National Coordination Group for the Adoption of the Euro, comprising representatives of the ministries concerned and the Czech National Bank (CNB). The National Coordination Group is entrusted with the creation of working groups for making the necessary preparations in the different sectors for the adoption of the euro, to be led by the National Coordinator appointed by the government. An important decision which had to be made right at the beginning was the decision on how the euro would be introduced in the Czech Republic. EU legislation offered three potential scenarios of transition to the euro – using a transitional period, a one-off transition to the euro using the “gradual abolition phase”, or the one-off transition to the euro called “Big Bang”, which is a scenario where the euro is introduced in cashless and cash payment operations at the same time. Today, when the euro is already an internationally recognised currency, new Eurozone members without exception choose the Big Bang method. The examples of Slovenia, Cyprus, and Malta confirmed unequivocally that this was the cheapest and simplest option for the introduction of the euro.
