How Far Along is Euro Adoption in the Czech Republic? Benefits for Businesses Still Remain

Abstract

The objective of the paper is to assess the reasons for the current negative position of the Czech Government toward euro adoption and to find out whether the expected benefits of euro adoption for Czech companies still remain. The postponement of euro adoption in the Czech Republic has mainly been caused by the current problems of the euro area. The benefits arising from euro adoption are subject to the reduction of the exchange rate volatility and of the transaction costs, whereas they also depend on the degree of integration with the euro area. These benefits may still be expected - neither the financial crisis nor the economic recession has affected them. The integration of the Czech economy with the euro area is high and still growing. Therefore, euro adoption will lead to the stimulation of mutual trade of the Czech Republic and the euro area.