Euro adoption: Crunch makes euro attractive
Eastern Europeans think it could be a haven in troubled times.
The euro is poised to emerge as one of the biggest gainers from the global credit crunch as regimes across central and eastern Europe are rethinking their attitude toward the single European currency project. After years of high growth and rising foreign direct and portfolio investment, many countries in emerging Europe are now being buffeted by the chill winds of an economic and investment downturn and consequently are looking towards European monetary union as a potential safe haven from currency crises.
Most recently, the Polish government announced that it was looking to accelerate its plans to join the eurozone, setting an ambitious entry date of January 1 2012. Prime minister Donald Tusk is planning to make constitutional changes next year that would allow the country to join the European exchange rate mechanism (ERM-2) in summer 2009, which would be the precursor to its setting a final exchange rate between the Polish zloty and the euro in the summer of 2011.
Commenting on the Polish plans for euro entry in 2012, Juraj Kotian, co-head of macroeconomic and fixed-income research at Erste Bank in Vienna, says that the biggest obstacle to the government meeting its entry date will be a political rather than an economic one.