None of the countries that have not yet joined the euro meet all the membership criteria and many have even deviated from the rules set out to do so, the European Central Bank said in a report on potential members on Wednesday.
All EU members, except Denmark, must adopt the common currency, but failure to comply is not penalised. Therefore, only a few are actively working to join, while most others prefer to maintain an independent monetary policy.
“Reflecting difficult economic conditions, there has been limited progress in meeting the convergence criteria,” the ECB said in a biennial report on the progress of Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden.
But the issues go far beyond simply meeting economic criteria, the ECB added.
“The quality of institutions and governance is relatively weak in all Central and Eastern European countries analysed, especially in Bulgaria, Romania and Hungary,” he said.
The divergence from the euro’s criteria was largely due to the economic fallout from Russia’s war in Ukraine, as most potential euro members have long been dependent on Russia for their energy needs.
Hungary appears to be among the countries with the weakest results. According to the ECB, the country has not complied with rules on inflation, debt, budget deficits and long-term borrowing costs, its currency is highly volatile and it has not complied with rules on central bank independence and the ban on monetary financing .
Source: Terra
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