European Currencies And Forecasts For Euro Adoption

Euro is one of the most popular currencies in Forex, with EUR/USD pair being the traders’ favorite. Indeed, the euro is traded with many other currencies too. Therefore, the EUR traders undoubtedly have lots of different opportunities to cash in on the Eurozone economic strength.

Needless to say that the euro plays a big role in the European financial system. In the EU, already 19 members use the euro and the rest (except for Denmark and the UK) will have to adopt it.

Although the euro seems to be a nice invention, some hesitation surrounds it. The reason is simple – the non-EUR countries, which are expected to adopt the euro, are afraid of the Eurozone instability that came out in the form of the European Debt Crisis. Additionally, in some cases the EU skeptic political agenda also contributes to the delays in the adoption.

Nevertheless, the ECB president, Mario Draghi is still confident about the future of the single currency and his administration will do whatever it takes to preserve it. “The euro is irreversible” – he once said.

mario-draghi-tshirt

 

In case you feel about the euro like Mr. Draghi does, you may be interested in having some stylish merchandise to express it. Check out the “Euro is Irreversible T-Shirt”.

It is fair to say that the enlargement of the Eurozone is under a big question mark. Yet, let’s try using the crystal ball and also do some research to make some predictions about the future euro adoption. Besides that, we suggest deepening our knowledge about some of the current users of the euro while also mark the European countries that have little to no probability to adopt the single currency at all.

How does the country join the Eurozone?

Before we dig into some analysis, it is important to point out the way that the EU member states should follow to join the Euro area. Specifically for this purpose, the EU officials crafted the ERM II framework. The two-year long exchange stability program, ERM II is an obligatory step in the euro adoption process. The idea behind this is to peg the non-euro currency to the euro at ±2.25%, allowing the fluctuations only within the set limits. Additionally, participation in ERM II encompasses several criteria, including the acceptable levels of HICP inflation, budget deficit, exchange rate, long-term interest and compatibility of legislation. In fact, the only participant of ERM II is Denmark.

Sooner or later, adopting euro is a must for 7 non-euro EU members states, with an exception of Denmark because of an opt-out and the UK (we all know why).

At the moment of this writing, the current euro refinancing rate (main interest rate in Eurozone) is kept at 0%. On the flip side, the inflation rate in the Euro area is slightly above the target level – 2.1%.

Known Dates of EUR adoption

Bulgaria

Perhaps, one of the states closest to adopting euro is Bulgaria. The country joined EU in 2007, while its currency, the Bulgarian Lev (BGN), has been pegged to euro since the single currency inception in 1999. The exchange rate of EUR/BGN is 1.96. As for the interest rate and the inflation rate, both of them are kept at the level of 1.4%, which meets ERM criteria.

Recently, Bulgaria expressed its willingness to adopt the euro and the European Union backed the initiative. Furthermore, Bulgarian finance minister Vladislav Goranov and the central bank’s governor Dimitar Radev announced that they anticipate July 2019 to be the date of ERM II participation, while also joining the banking union. It will take 2 years onwards from July 2019 until the full adoption of the euro, i.e. in July 2021.

 

 

Estimated Dates of EUR adoption

Romania

As for Romania, the state is positive about possible euro adoption, once the country is able to meet the necessary criteria. Yet before this important milestone is achieved, Romania will stick to its national currency – Romanian Leu (RON). Unlike the lev, the leu is not pegged to euro, and the exchange rate of EUR/RON is 4.67. The current inflation rate in Romania is 5%, while the interest rate was set at 2.5%.

1 2 3 4
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.