Supporting Small and Medium-sized Enterprises in Preparing for the Euro Adoption in the Czech Republic

Abstract

1. Introduction Upon its accession to the European Union, the Czech Republic undertook to adopt the single European currency. Thorough preparation of enterprises must precede the transition from the koruna to the euro. This preparation will eliminate the risk of destabilization in business sector and in financial markets. The objective of the paper is to the current state of support provided in the area of preparation for the euro adoption within the SME sector and potential areas that need further expansion of such support. The structure of the paper is as follows. The review of literature in the given area is followed by an assessment of views prevailing among SMEs in respect of the euro introduction. It is also supplemented with current public opinion (i.e. views of voters) regarding the euro introduction. It is followed by discussion, whether the euro introduction in the Czech Republic represents a current issue. The next part deals with measures that are to be implemented by companies to ensure successful conversion from Czech koruna to the euro, emphasizing various specifics of the SME sector. The last part of the paper evaluates, whether the existing support of the euro adoption preparation process is sufficient. The conclusion summarizes the key findings of individual sections of the paper. 2. Literature Review The evaluation of views of the Czech public regarding the euro introduction has been taken over from the Eurobarometer surveys (EC) and the Czech Public Opinion Research Center. The views of SMEs are particularly explored in surveys by the Small and Medium-Sized Enterprises Union of the Czech Republic and of the Association of Small and Medium-Sized Enterprises and Crafts of the Czech Republic. The preparations of companies for the euro introduction are mainly included in the National Euro Changeover Plan for the Czech Republic prepared by the National Coordination Group. In addition to this, there are many studies that examine the preparations for the euro introduction as well as the effects thereof, particularly Study of the Impact of the Euro Adoption (Lacina et al., 2008). Approaches of various Slovak companies to the euro introduction process are also inspiring, mainly included in a study of the National Agency for the SME Development entitled Preparedness of SMEs for the euro introduction (2008) and in a study prepared by the National Bank of Slovakia entitled Estimate of potential effects of the euro introduction (2006). Moreover, the paper also relies on findings from the dissertation of M. Sudrichova The introduction of the single European currency, the euro, in the Czech Republic from the perspective of small and medium-sized enterprises (2012). For the time being, there is only one methodological guide, focused on the SME sector and the transition from the national currency to the euro, entitled Fit for the euro--A guide for small & medium-sized enterprises (EC, 2006); however, it is too general and shallow. 3. Views of SMEs regarding the euro introduction in the Czech Republic Significant changes have occurred in terms of the views of the SME segment. Let us compare results of two different surveys. In a survey organized by the Small and Medium-Sized Enterprises Union of the Czech Republic in November 2007 (300 respondents), 73% of all respondents answered definitely yes or rather yes to whether they support the euro introduction in the Czech Republic. The euro introduction process was mainly supported due to elimination of the CZK/EUR exchange rate fluctuations and thus facilitation of trade with euro area countries. 60% of all business believed that the Czech economy is prepared for the euro introduction and that their products are competitive. 80% of all respondents expected increasing inflation as a result of the euro introduction. (2) The views expressed in a survey conducted by the Association of Small and Medium-Sized Enterprises and Crafts of the Czech Republic in May 2010 (525 respondents) were quite different. …