The czech economy and the euro

The article discusses issues concerning the prospects for euro adoption in the Czech economy. Once the Czech Republic becomes the member of the EU, it also must become - sooner or later - the member of the EMU. There are not too many options: in fact the freedom is only in the speed of euro adoption and partly in the bargaining about the central parity upon entering the ERM2. The article discusses objections regarding the sacrifice of autonomous monetary policy and similarly the problem of the nominal vs. real convergence. It further summarises major insights of the optimum currency area approach. The author does not find any strong arguments against an earlier euro adoption which would outweigh the benefits of the single currency for the Czech economy. Also the historical comparison with several EU countries in situation before joining the EMU shows the realistic background of the fast track strategy.

Keywords: monetary policy, financial crisis, European Union, price level, nominal and real convergence, euro adoption, optimum currency area