This year marks the 20th anniversary of the issuance of the first euro coins and banknotes. This is money from 19 EU countries. 340 million people use it every day. There are currently 23 billion euro banknotes in circulation. With a value of 1,260 billion euros, of which a third is used outside the euro zone. Currently, the euro is the second most important currency in the world after the dollar. The euro is a power. While it’s not a cure for all economic ills, most Poles facing the war in Ukraine say they would feel safer with the euro in their wallet. What benefits can the euro bring us?
What benefits can the euro bring us?
When we joined the EU, we agreed that one day the zloty would be replaced by the euro. There were even dates, but over time, the more the links between our economy and the EU were built, the more the prospect of adopting the European currency became distant. In recent years we have often heard how lucky it is to have a zloty. We govern ourselves. No one is pulling us down. We wouldn’t grow at such a pace with the euro.
Former Prime Minister and Chairman of the National Bank of Poland, prof. Marek Belka said in 2014 that Poland would be ready to join the eurozone when our economy was as competitive as Switzerland’s. A labor market as flexible as the Danish, and a discipline of public finances like Estonia. Four years later, Stefan Kawalec, former Deputy Minister of Finance and co-author of the book “Euro Paradox. How to get out of the common currency trap?” he said in an interview for Dziennik.pl that “If Poland, deprived of its own currency, encounters economic problems, the political gains will not be realized. We will become a petitioner asking for help.”
We will catch up with the richer sooner with the zloty
Even in 2019, the Supreme Court of Auditors ruled on whether Poland should join the euro zone.
“A single currency helps EU countries that are ready to accept it. Therefore, it may be more important than rapid entry into the eurozone to catch up with development lags and make the competitiveness of the economy equal to the level of eurozone countries,” the auditors wrote after a study thorough. Compare how joining the euro has affected different countries in the zone.
“The exceptional stability of the zloty discourages Polish companies from thinking about adopting the euro”, summed up in 2020 the consultancy firm Grant Thornton of the results of its economic survey on the attitude of Polish entrepreneurs vis-à-vis the euro. euro. The year 2021 has brought no changes here. “Polish companies are still reluctant to adopt the EU currency. 38% would like our country to join the euro zone. medium and large enterprises. This is the second lowest result since 2010”, summed up the next edition of the survey.
war changes everything
Until suddenly, literally overnight, everything changed. The war in Ukraine deprived the zloty of stability and predictability. The Wall Street wolves threw the zloty into a basket of currencies laden with war risks. Of course, the euro also touched, but much less. Comparing the exchange rate of the zloty to the dollar in March, our currency lost 13% and the euro 4.6%. The ARC Rynek i Opinia study, conducted after Russia invaded Ukraine, shows that 52% of Poles would feel safer with the euro. One in 10 Poles admitted to buying a foreign currency. More of us would probably be in favor of adopting the euro if it weren’t for fear of an unfavorable exchange rate and rising prices. No less than 68% of Poles are afraid of it today. Many of us complain that we have too little information about joining the euro zone.
Everyone, for that, must have heard what happened to the hryvnia. There was no shortage of stories on social media of tearful Ukrainians leaving our exchange offices. It turned out overnight that their money was worthless. If this conflict were to worsen, the same could happen with the zloty. Therefore, even those who once thought it was better to stick with the zloty are changing their minds.
“Zloty is subject to enormous turbulence in times of crisis. And who knows how many years of this kind await us, ”wonders the prof. Marek Belka and in “Newsweek” calls for the adoption of the euro. Likewise, Robert Gwiazdowski.
“Why was I against it? (euro adoption editor) Because I thought my own currency was an asset. We saw it positively in 2009 and Greece negatively in 2010. Why am I for it? Because in the current war, money becomes a “military” weapon. The zloty is too weak,” wrote Robert Gwiazdowski on Twitter.
After NATO and the EU, it’s the turn of the euro
There are more and more such voices. Sławomir Dudek, FOR’s chief economist, believes that alliances with NATO and the EU are as important as the alliance with the euro zone. Arkadiusz Muś and Marek Tatała, founders of the Foundation for Economic Freedom, call “The time of the euro and stronger integration with the EU in Poland”.
“Now is the right time for all political forces to work together to join the euro zone and adapt the economy and the legal system to this change. Russia’s aggression against Ukraine fundamentally changes Poland’s situation in Europe and heralds new global disturbances. The military threat near our borders and economic uncertainty are increasing, which means that the Polish zloty is rapidly losing its value. (…) The political arguments in favor of the introduction of the euro are indisputable. This will strengthen our ties with the Union and the West. This will create additional incentives to restore relations with the EU. This will increase Poland’s influence on decisions within the European community and dispel doubts about Poland’s pro-European orientation. The financial security of our country and its people will be strengthened. “Write Arkadiusz Muś and Marek Tatała.
It’s more practical and safer with the euro
This pivoting of ours towards the euro is perfectly understandable. Christine Lagarde, director of the European Central Bank, recently quoted economist John Kenneth Galbraith.
“He once said: When money is bad, people want it to be better. When things are going, they think of something else. He argued that we want sound money not as an end in itself, but because it allows people to do more useful things in their lives: work, innovate, invest. And that is why the ECB ultimately exists. To ensure trust in money, so people can focus on what’s really important to them,” Lagarde explained, recalling that support for the euro has reached an all-time high: 76% of the population of the euro zone is now in favor of the single currency.
Christine Lagarde believes that the euro is the most tangible symbol of European integration. He cites surveys in which, when asked about the EU’s most positive achievement, euro area citizens tend to place the single currency at the top of the list. Right after peace between European countries and the free movement of people, goods and services.
“The euro makes our lives easier because it makes it easier to trade and travel abroad, as well as to study, work and live in another country. Euro banknotes allow us to work, study and travel in 19 different countries without having to change money”, the President of the ECB lists the advantages of the common currency.
Someone once said that the euro is synonymous with convenience and the zloty is synonymous with security. The war changed that. Joining the euro zone would help us attract more investment. This would reduce currency risk and interest rate risk. Today, we would like to pay as much for mortgages as in the euro zone. Currency conversion costs would also decrease. The euro is incomparably more resistant to speculation than the zloty. In a nutshell, the euro today is more secure and therefore more secure. Of course, all the advantages of the euro do not make the disadvantages disappear. But today there seem to be more advantages.
The article is part of the series “Economic freedom”, carried out on the pages of Bezprawnik within the framework of a project carried out with the Foundation for Economic Freedom. It is a foundation created in 2021, whose pillars are economic liberalism, modern education, Poland’s accession to the European Union and the rule of law. You can find out more about current activities and events on this website.