It was proposed to switch to the euro for the first time in 2012. Then, in 2015. After that, they started talking about 2024 as the most likely date of transition to a single currency. Now the proposed deadline is 2030.

The degree of readiness of European Union (EU) member states that have not yet adopted the euro to adopt the single currency is assessed by the convergence reports produced by the European Central Bank (ECB) every two years, Ella Kallai wrote in an analysis sent on Thursday , Chief Economist of Alpha Bank.

The criteria taken into account are: price stability, the health of the fiscal position, as it is a consequence of the level of the budget deficit and gross public debt in relation to GDP, the stability of the exchange rate in relation to the euro, the convergence of long-term interest rates and legal convergence, especially related to the independence of central banks and their legal integration into the Eurosystem – the monetary body of the Eurozone, Ella Callai’s analysis also shows.

• The criterion of price stability is considered fulfilled if the harmonized average annual inflation does not exceed by more than 1.5 percentage points. the average of the 3 lowest values ​​of the harmonized average annual level of consumer prices in the EU member states.

• A healthy fiscal state is considered a state in which the annual budget deficit is less than 3% of GDP, and the gross public debt is less than 60% of GDP.

• A currency is considered stable if, during two years, which is the minimum period to be spent in the Exchange Rate Mechanism II (MCSII), the exchange rate against the euro does not depreciate or increase by more than 15% from the established central parity. before joining MCSII.

• The long-term interest rate criterion is considered fulfilled if the yield of long-term government bonds on the secondary market does not exceed by more than 2 percentage points. the average yield of long-term government bonds of the three EU countries with the lowest inflation.

The conclusions of the latest convergence report compiled by the ECB in 2022 for the countries of the region – the Czech Republic, Hungary, Poland and Romania – were:

1) none of the countries met the criterion of price stability;

2) only in Poland both the budget deficit and the gross public debt were lower than the Maastricht ceiling; while in the Czech Republic and Romania only gross public debt was below the Maastricht benchmark;

3) none of the countries participated in the MCSII and only in Romania the volatility of the exchange rate against the euro was assessed as very low, mainly due to the policy of controlled fluctuation, in other countries where the exchange rate is floating, the volatility was assessed as increased;

4) only the Czech Republic met the long-term interest rate criterion;

5) the legislation of no country fully met the requirements of central bank independence, prohibition of monetary financing and legal integration into the Eurosystem.

These conclusions were formulated on the basis of available data up to April 2022.

Extending the analysis period to the latest available data reveals even more discrepancies.

In all countries, the excess of inflation above the Maastricht benchmark increased, and the smallest deviation in Romania was in December 2022.

Excluding Poland, the budget deficit is above 3% of GDP, with Romania and Hungary having the largest deviation in Q3 2022, Romania is included in the excessive deficit procedure from April 2020.

Gross public debt in the Czech Republic, Poland and Romania is below the Maastricht benchmark of 60% of GDP.

Exchange rate volatility against the euro persists in all countries except Romania.

Long-term government bond yields exceed the Maastricht benchmark in all countries, especially in Romania and Hungary.

To put Romania back on the convergence path, the recommendations of the Convergence Report are valuable and useful to follow.

Romania needs an economic policy focused on stability and far-reaching structural reforms.

The relatively weak quality of the country’s institutions and governance, and a weak business environment continue to hamper growth potential.

Effective use of EU funds remains important for accelerating economic growth in the medium term and guiding the economy in the future transition to “green” and digital technologies.

Reform efforts are needed to combat corruption, improve competition and predictability in the country’s fiscal, judicial, regulatory and administrative systems. To further strengthen trust in the national financial system, competent authorities should continue to improve their supervisory practices, following the recommendations of relevant international and European bodies and cooperating with other national supervisory authorities in EU member states within the framework of supervisory boards.

Since February 2010, the Committee for the Preparation of the Transition to the Euro has been operating within the BNR

Together with other countries, Romania is among the member states of the European Union, which are obliged to adopt the euro, which practically means full participation in the Economic and Monetary Union.

As part of the Convergence Program for 2021-2024, Romania maintains its commitment to join the euro zone, but the government’s efforts are focused on minimizing the negative social and economic consequences of the COVID-19 pandemic.

At the national level, the coordination of preparations for the adoption of the euro is carried out by the Interdepartmental Committee for the Transition to the Eurocurrency, headed by the Prime Minister, which includes the Minister of State Finance, the Governor of the National Bank of Romania, managers or persons appointed by them at the management level of other authorities and state institutions, as well as representatives of employers’ associations and trade unions.

The interdepartmental committee was established in May 2011. In December 2016, by Government Resolution No. 931/2016, which establishes its structure, organization and main powers.

In continuation of these steps, the Government’s Emergency Order No. 24/2018, the National Commission for the Justification of the National Plan for the Adoption of the Euro4 was created to define the actions and promote the reforms needed to modernize the Romanian economy for the transition to the Euro.

The National Commission is headed by the Prime Minister and the President of the Romanian Academy as co-presidents, respectively, the Governor of the National Bank of Romania and the Vice-Prime Minister appointed by the Prime Minister by decision as Vice-Presidents.

The National Commission developed the Report on the justification of the National Plan for the Implementation of the Euro and the National Plan for the Implementation of the Euro, strategic documents that were approved by the Government of Romania on January 30, 2019. The conclusion of the Report is that thanks to persistent efforts and solidarity of social forces, there are prerequisites that on the horizon of 2024, Romania will be able to fulfill the fundamental requirements for adopting the euro.

Also, within the framework of BNR, since February 2010, the Committee for the preparation of the transition to the euro has been operating, which is a forum for discussing issues related to nominal and real convergence, designed to support the efforts of the central bank regarding the participation of Romania, with full rights to the Economic and Monetary Union .

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