After Slovakia’s euro adoption, Poland is becoming another “laboratory” thanks to which Czechs can check out their own plans for euro introduction. Slovakia started to use the single European currency in January, and Poland confirmed its plan to enter the eurozone in 2012 despite the current crisis.
However, that means that Poland has to reduce its currency fluctuations against the euro by entering the European exchange rate mechanism ERM-2 very soon. And that is a very courageous task given the current financial crisis.
“The pressure on the zlotý is going to be huge after it enters the ERM-2, but the central bank is convinced that they are able to cope with that,” said Petr Očko, former coordinator of euro adoption in the Czech Republic. The zlotý is to enter the exchange rate mechanism as early as this half of the year.
If Poland coped successfully with its currency operation within the ERM-2 even in the current situation, it would provide a strong argument to those advocating a fast euro introduction in the Czech Republic. Nevertheless, economist Pavel Kohout of the Czech government’s anti-crisis council believes that entering the ERM-2 is “extremely dangerous at the moment”. The zlotý has recently shown the biggest losses among EU currencies, he said. A currency in the ERM-2 should not weaken by more than 15% against the euro, but the Poles seem to expect the zlotý to be rather firming from now on and to start moving in line with the euro, not along with the other central European currencies, said Petr Očko.
The main objective for the Polish government, which is facing criticism at home, is to reduce volatility, that is, sharp swings in the zlotý exchange rate, and to introduce the euro as soon as possible. Czech economists rather support the opinion that the time is not suitable for ERM-2 entry during the current huge swings in exchange rates. “Poland has chosen the worst possible moment,” said Petr Zahradník, Česká spořitelna bank’s main expert for European affairs. He believes that the Czech Republic should have found inspiration in the earlier euro adoption in Slovenia and Slovakia. Now it should wait “until the storm is over”, he said.