What do Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden have in common?
All are in the European Union and, according to treaties, all seven must eventually adopt the common currency of the euro. But for another year running these euro rejects are nowhere close.
That’s the gist of a new biennial report issued by the European Central Bank (ECB), which found that the seven nations remain on the fringes of the eurozone and are likely to continue spending krona, koruna and other currencies instead of the euro.
There are various reasons the group is falling short. Croatia runs too deep a deficit and, along with Hungary, has too high a debt burden to qualify for euro membership under the rules of the EU. And in none of the counties “is the legal framework fully compatible with all the requirements for the adoption of the euro,” the report noted.
Those requirements have to do in large part with central bank independence and the EU’s prohibitions concerning monetary financing — essentially printing money in order to paper over government deficits.
In order to reach convergence with the eurozone, as the ECB calls joining the club, each of the seven countries would have to revamp their central bank policies along lines laid out by the bank.
But that might be the least of those countries’ hurdles. Public opinion has swung against euro adoption following years of debt crises and political turmoil, exemplified by the continuing battle over Greece’s unsustainable debt.
In 2015, 53 percent of survey respondents in those nations believed joining the eurozone would bring “negative consequences,” up from just 32 percent in 2009. Of the seven countries, only Hungary and Romania had a positive outlook on joining the euro contingent. Swedes rejected membership in a public referendum in 2003.
The other two EU countries outside of the eurozone, Britain and Denmark, were granted exemptions from having to join the currency.