Eurozone – overview

The strong core of the European Union is represented by the Eurozone. The adoption of a single currency in 1999 became essential in the functioning of the common market and in the implementation of financial policies. However, not all EU states have switched to the new currency.

Denmark chose to keep its own currency. Great Britain did the same when it was a member of the union. Sweden also chose, through a referendum, not to adopt the European currency, but the discussions have not ended definitively.

Other countries do not meet the very strict convergence criteria, which regulate inflation, public debt, monetary issues and essential elements of financial policy. For these reasons, many of the former communist states were unable or unwilling to abandon the old currencies. Among the Eastern countries, only Slovakia, Slovenia and Croatia have made the switch to the Euro. In 2025, Bulgaria will be added to them, which already meets all the criteria. Also, its currency, Leva, is already pegged to the European currency rate.

Romania should make the transition to the Euro in 2029, but the target is very difficult to reach. Moreover, Bucharest, without publicly assuming such a thing, considers that Romania’s public debt is small in relation to other European states and wants to keep a high level of deficit, double that of the Euro zone, in order to finance current expenses and social programs . This would mean the indefinite postponement of the transition to the Euro. However, the high interest rates at which the Romanian state borrows means that a significant part of the deficit goes directly to the payment or refinancing of interest.

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text: extracts from 

CULTURA magazineauthorized reproduction