The European Commission and the European Central Bank have published their latest convergence report assessing the progress of EU countries outside the euro area. The report assesses each country's readiness for the euro and highlights the progress and challenges to meeting the criteria for euro area membership. According to the latest convergence report, Hungary is currently not in a position to join the euro.
Convergence Report
of Convergence Report It assesses the progress of EU member states outside the euro area (excluding Denmark, which has withdrawn from the euro area). The report, which is published at least every two years or upon request by member states aspiring to join the euro area, examines how these countries are progressing towards meeting the criteria required for the adoption of the euro.
As H.V.G. According to the report, six EU countries, including Hungary, were assessed in a convergence report prepared by the European Central Bank and the European Commission. The report covers Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden. The results are mixed, but they may not come as a big surprise to most people.
Eurozone expansion
According to the latest report, out of the six countries mentioned above, Bulgaria meets the most criteria, although the Czech Republic and Sweden are not bad either. The same cannot be said about Hungary.
More precisely, Hungary does not meet any of the criteria.
Moreover, the Czech Republic and Sweden appear to be content with their current currencies, raising further questions about their willingness to introduce new currencies.
Hungary does not meet the criteria
According to the Convergence Report, Hungary's inflation rate is expected to be 3.3% compared to an annual average of 8.4% in May 2024, posing a major obstacle to euro area membership. Moreover, Hungary's budget deficit of 6.7% is well above the expected 3% and the highest among the countries assessed. Romania follows with a deficit just 0.1% lower, having continued excessive deficit policies since 2020.
The criteria for euro adoption also include long-term interest rates, expected to be 5.5%, which only three out of six countries meet; Hungary's is particularly low at 6.8%. Another key criterion is the quality of governance, an aspect that is difficult to quantify. Only Sweden meets this expectation, while Bulgaria and Hungary face problems due to perceptions of widespread corruption, making other countries hesitant to join them.
Stringent requirements
“The tech giant is looking to expand its presence in the U.S.,” said ING analyst Peter Vilovac. index He noted that there are fairly strict requirements for the euro to be adopted. “(…) there is a growing debate about the extent to which these requirements actually help to create and put into practice the concept of an optimal currency area,” he said. There was a time when Hungary met all the conditions for euro zone membership since it joined the EU. But that is all in the past now.
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