Arguments for adopting the euro by Poland include the elimination of exchange rate risk and “home bias” (i.e. thinking in the local currency), as well as greater economic stability for Polish households and enterprises, believes the Senate candidate for a member of the Council Of the Monetary Policy Policy (MPC) Joanna Tyrowicz. According to her, monetary integration with the euro area “should take place sooner rather than later”.
“If I had to choose the two most important arguments for which being in the euro area sooner rather than later is in our best interest, and not against it, these arguments are as follows,” Tyrowicz said at a meeting of the Senate Committee on Budget and Public Finance.
“The monetary integration itself is a natural consequence of the very idea that there is some kind of integration in Europe,” she added.
Exchange rate risk and “home bias”, that is, thinking in local currency, are factors that prevent the market from functioning as a single, she pointed out.
“Mutualisation of the currency unequivocally eliminates the exchange rate uncertainty and reduces the home bias, and there is a lot of evidence for this,” Tyrowicz emphasized.
“This is not the end of the integration story. The single currency alone, even with a large dose of monetary policy coordination, is not enough, because when asymmetric fiscal shocks appear, instruments need to be launched to alleviate these asymmetries, because the single currency alone will not sustain it. Hence the idea of integration. fiscal as a certain next, multi-stage step. And Europe is following this path,” stated the candidate.
She also pointed out that the second argument is an internal argument – it concerns how our businesses and our households work.
“Our rate stabilizes when times are good, and when a pandemic or war breaks out, it is perfectly destabilized. If we think about the disappearance of this channel of total uncertainty from the perspective of our households and businesses, it is like buying insurance: we do not buy insurance that everything will be fine, we buy insurance that something potentially can go wrong,” said Tyrowicz.
At the same time, she pointed out that the decision on the date of adopting the single currency belongs to the Polish government.
“Answering the question about the euro – the MPC has nothing to say in this matter. It is a decision only by the government. As of today, entering the euro zone is impossible, because we do not meet any economic criterion and we do not meet the legal criterion permanently,” indicated the candidate .
“The economic criteria we do not meet, ie the interest rate, debt and inflation criteria. The economic legal criteria we do not meet, ie our constitution – Article 227 – and the rule of law reservation,” she enumerated.
In legal matters, it is the parliament that decides, she emphasized.
Source: MPC and ISBnews
