Hungary is considering adopting the Euro

A lot was being said about the future of the European Union after Brexit. It is the end of the community, many said.

Meanwhile, according to „Magyar Hirlap”, the Hungarians are thinking of adopting the Euro currency in their country.

Hungary’s Minister of the State Economy – Mihaly Varga – said that “if the economic processes will be stable and we will move closer to the average EU level of development, and our productivity will improve even more, I do not think joining [the Eurozone – red.] at the end of the decade is out of the question”. Varga noted that the final decision depends on the stability of the Euro and common fiscal policy. The minister emphasizes that if the Hungarians introduced the Euro as soon as 2008, the effects of the crisis for the people paying off loans in foreign currency would be less painful through the avoidance of the exchange rate trap.

Hungary, similarly to Poland and Czech Republic, meet all the criteria except the ERM II (Exchange Rate Mechanism improving the stability of member states’ currencies). According to the reports of the European Commission and the European Central Bank, Hungary met the condition of price stability – the inflation maintained at the level of 0.4% (reference rate is 0.7%); the level of long-term interest rate – 3.4% (reference rate: 4%); public debt below 60% with budget deficit below 3%.

It is not the first time the Hungarians are thinking of introducing the Euro. The plan was embraced by the then-ruling Hungarian Socialist Party, which after assuming power in 2002 announced the Hungarians will join the Eurozone as soon as 2007. Despite the proclamations this was not possible, as Hungarian Socialist Party’s rule resulted in the country failing to meet any of the criteria. How it will be this time? Time will tell.