Abstract
Abstract The enlargement of the euro area (EA), an unfinished process, was low on the European agenda in the period between the 2008 and the 2020 crises. The socio-economic consequences of the coronavirus pandemic and frictions in geopolitics would call for a coherent Europe, yet new and old fault-lines appeared in the EU involving the eastern periphery where sovereignty issues gained particular importance. The authors revisit the euro adoption process of the new member states, with a focus on the Visegrad Group (V4) countries, applying a two-track approach: a monetary policy analyses of EA entry as a rational cost/benefit issue and, second, a political economic survey of key stakeholders, set in the context of the dilemmas of retaining or sacrificing nominal monetary sovereignty. Even a piecemeal enlargement of the EA, involving Bulgaria, Croatia and Romania, would cause business consequences and political repercussions in the countries left out of EA. The paper concludes that further moves towards a developmental state model would preclude euro adoption and put such member state in collision course with the core Europe.
Highlights
Sweden was given the status of a ‘member state with a derogation’ in 1998, the 2003 referendum turned down euro adoption, and the authorities intentionally avoid fulfilling one entry condition
The fact that in this period Slovakia clearly lagged behind the rest of the Central Eastern European (CEE) countries in terms of integration into the international economic order can be attributed to the combination of numerous factors, such as the lack of transparency in Slovakia’s privatisation processes, the government’s inexperience in international affairs and its worrisome friendship with Russia
One would have assumed that particular domestic political interests, government considerations and other par excellence political factors would gradually lose importance in the process of real and institutional convergence within the European Union (EU), and the increasingly positive cost/ benefit balance tilts the arguments in favour of a timely euro area (EA) entry
Summary
Europe was exposed to hard tests in the 2020 crisis. Old and newer fault lines reappeared in the European Union (EU) in the wake of the pandemics, cleavages of national interests emerged somewhat unexpectedly, and former certainties, such as free movement of persons and public support to the rule of law were shaken. As based on a large but heterogeneous body of academic research and policy analyses, assumes that the euro adoption for business actors is predominantly a rational cost/benefit issue; yet for many other key stakeholders (the general public, governments, central banks and political parties) the framework of reference is sovereignty status with cost/benefit consequences (Bod et al 2021). This is our context for offering insights about feasible policy options for the parties concerned
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