Together with Prof. Mihaela Luţaş, we analyze the European integration of Romania. A few words today about Romania and the Eurozone in the article published in EURACTIV.com.
With Bulgaria and Croatia getting nearer to adopting the euro, eurozone enlargement is becoming more relevant, but not all Eastern European countries view this process the same. Romania should make the adoption of the euro a strategic objective that would support the country’s stability, argue Mihaela Luţaş and Dan Luca.
Dr Mihaela Luţaş teaches the European Economic Policies course at the “Babeş-Bolyai” University in Cluj-Napoca and is a member of the General Association of Economists from Romania; Dan Luca is an associate professor at The National School of Political Science and Public Administration (SNSPA) Bucharest, and vice-president of EURACTIV.
After more than six decades, the Union and its structures are facing a new challenge. Inflation and rising borrowing costs are putting pressure on the Eurozone. Nevertheless, the common currency and a common institutional and legal framework bring several advantages ultimately reflected in stable and high living standards.
For Romania, a member of the European Union for the last 16 years, adopting the Euro and being part of the Eurozone is a question of time as all member states except Denmark (because of its opt-out clause) are theoretically required to join the currency union sooner or later.
It is a slow process, as it implies several steps and a lot of criteria that need to be met before a country can be considered eligible to join the eurozone and adopt the euro.
With regards to the convergence criteria, Romania experienced a lot of ups and downs, from being close to fulfilling a part of the Maastricht criteria in 2016 to the current state in which none of the requirements defined in the EU Treaties is being fulfilled.
When discussing new member states, Bulgaria used to be considered in the same league as Romania. But Bulgaria, probably in 2024, and Croatia in January 2023, will adopt the single currency, given that both are already members of the EU’s Exchange Rate Mechanism.
The euro adoption by Bulgaria might be a strong incentive for the Romanian political forces to pitch this topic as a significant issue in defining the national interest.
To enter the eurozone, Romania should prove that its market is compatible with the EU’s internal market structures using nominal and real convergence indicators.
Being part of the eurozone and using its single currency would enhance the transparency of the way funds are used and lower the conversion costs, diminishing the different forms of risks it determines.
That is why joining the eurozone should be a common project for politicians, technocrats and civil society.
The latest Eurobarometer Survey, from April 2022, shows that less than half of Romania’s population is aware of and feels informed about the costs and benefits of euro adoption, while the figures for Bulgaria and Croatia are above 50%.
This means that not only the National Bank of Romania, considered along with the European institutions the most trusted source of information about the changeover, but also other stakeholders from political parties to professional bodies and civil society organisations should be involved in making citizens understand the importance of adopting the single currency.
Efforts must be made in various ways; for example, Romania should use EU funds more efficiently.
It is evident that, for Romania, as in the case of all the other members of the eurozone, adopting the euro is generating both costs and benefits. Among the costs is the loss of control over national monetary policy, including its capacity to stimulate economic growth by using specific financial instruments.
The benefits, meanwhile, are increased stability and growth, less exchange rate risks, more transparency in the market and an enhanced capacity to attract investments as part of a stable economic, monetary and political union.
Dan LUCA / Brussels