Eurozone - More Risks Than Profits

The President of the Polish Economic Society discusses Poland's entrance to the Eurozone.

Right now, Poland does not meet fundamental conditions which would let her consider the entrance to Eurozone in realistic terms. – says Professor Elżbieta Mączyńska, President of the Polish Economic Society. She believes it is wrong to try to enter Eurozone as soon as possible. The profits from the entrance may not cover the losses.

According to the Polish Economic Society, Poland does not presently fulfil some of the basic convergence criteria: price stability, fiscal and exchange rate criteria, or the criterion specifying interest rate. But that is not all: the country is also unprepared in economic terms.
Poland does not meet the four Maastricht criteria, but it also doesn’t fulfil the real convergence conditions, which would bring us towards the level of more developed countries.
– comments Professor Mączyńska.

As an example, she points out to the investment in science in development, which is significantly lower in Poland than in many other European countries. Wages are also low in comparison with the Eurozone countries.

These economies are not fully comparable, which means that in such a relationship, the less developed country bears the high costs of entering the Eurozone. – explains Professor Mączyńska. Prior to making the decision about the entrance, Poland ought to increase its economic productivity and efficiency. Membership in the Eurozone is more profitable for countries which are better developed and meet the real convergence criteria.

Professor Mączyńska observes: - If Poland’s entering the Eurozone was not conducive to levelling the imbalance, it could find itself in the same situation as Greece or Spain: there would be a loss of balance in the public financial management system. One of the strong arguments for entering the Eurozone was based on the assumption that a country accepting the system is subject to a greater financial discipline. However, the situation in Greece and Spain proves that it doesn’t have to be so.

The professor stresses, however, that we cannot forget about the profits of entering the Eurozone. One of them would be the reduction of transaction costs. – Yet the differences show that if we entered the Eurozone so rapidly (for which we won’t get a permission, as we do not meet the criteria), we would have to bear large costs, which would lead to further, social consequences. Then, the state budget would have to intervene. I believe that in this matter haste is inadvisable. – concludes Professor Mączyńska.

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