The introduction of the Euro and Central Europe

Abstract

ABSTRACT. Integration maturity means not just meeting the Maastricht convergence criteria, but we analyse integration maturity in broader terms, and we try to answer the question in the light of compliance with all of these requirements. The acceptance mean how far the participants of monetary integration are prepared to take over the required measures and fit into an institutional and policy structure, which is condition of successful operation of the system. This preparedness assume institutional and policy capacities as well, but also the political support of the project by all the actors, including the general public. The maturity and the acceptance are two sides of the coin, and both are necessary for the success of monetary integration.This paper concentrates on the three countries (Czech Republic, Hungary and Poland), and we try to explain, why they made a total turn concerning the euro issue, what are the main interest, and positions behind these drastic changes. We examine two major issues: a) how far the three Central European countries comply with the monetary integration maturity criteria, and how far they are ready to accept all of the circumstances and consequences, which follow from their participation in monetary integration.Keywords: Maastricht criteria, convergence, Euro, Central and Eastern Europe, integration maturity, monetary integration.JEL Classification : E 42, F45, P2Theoretical frameworksEvery integration body sets specific conditions or criteria for membership for those who wish to join it. This largely constitutes the issue of integration maturity of a given country or group of countries (the integration maturity was the focus of research conducted by a research group from the Department of World Economy at Corvinus University of Budapest in a program financed by the Hungarian National Research and Development Plan between 2002-2004 (see Palankai, 2004, 2005, and 2014). It can be shown that this maturity embeds a number of factors, as well as the level of integration and the type of the countries which wish to integrate.The integration maturity question is posed in connection with the increasingly close forms of integration and the agenda of the Economic and Monetary Union (the so-called 'positive integration'). The outcomes have clearly demonstrated that integration maturity cannot be left out of consideration. Even though market liberalization ('negative integration') always have consequences, they remain largely unilateral and asymmetric (meaning that the less-developed and weaker partners could lose more than win) and the retroactive effects are not revealed in an obvious manner. As the history of European integration showed, the question of unequal division of advantages was addressed either by asymmetric trade liberalization or financial transfer in favor of weaker partners (asymmetric associations).The situation changed with the Economic Union. The reciprocal effects became direct and more thorough. The economic problems of the less developed partners (e.g. budget deficit or regional inequalities) impact the economy of the more developed partner and can cause disturbances (e.g. by triggering inflation) in a more direct way. Thence, any decision to join an economic union brings about fundamental effects on the institutional and political structure of the country in question. With regard to this, maturity or preparedness for integration is an issue that has to be examined and is therefore a matter of common interest.Yet another reason was the aspiration for full EU membership of the Central and Eastern European countries. In their case, considering the huge differences in development and the unprecedented number of CEE candidates wishing to join the EU at once, it became clear to the EU policy-makers that the EU Enlargement would have more far-reaching consequences that previously envisaged.Due to the above, in the early 1990s the EU had to set two types of accession criteria, which assumed a certain level of integration maturity in the given context. …