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August 14, 2022

Isarescu: 2021-2023, best time to switch to euro

A political quasi-consensus is needed internally, said the governor of BNR after being awarded the title of Doctor Honoris Causa by the University of Bucharest.

The desired goal should be to reach a political quasi-consensus internally regarding the main coordinates in adopting the euro currency, Mugur Isarescu stated yesterday at the awarding ceremony of the 16th title of Doctor Honoris Causa by the University of Bucharest, which also celebrated 150 years since the institution was founded. According to the governor of BNR, these coordinates must be met with and monitored consistently and all deviations “beyond the narrow horizon set forth by an electoral cycle” need to be avoided.
“It would be best to set the target date for adhering to the Euro Zone at or toward the end of a period of relative political calm, where electoral cycles are concerned. Electorally speaking, the calmest period would be 2021-2023 (three consecutive years without elections),” the central bank official stated further, adding, “It is about a change of approach, of paradigm. The single currency has declined in popularity. The largest percentage of popularity is reported in Romania – 50 percent.” Postponing the switch to euro seems justified, Isarescu claims, including from the perspective of the Euro Zone. If the process expands too rapidly, it could lead to an accentuation of existing centrifugal tendencies in the current configuration.
So far, Romania has met three out of the four Maastricht criteria: sustainability of the fiscal position, long term convergence of interest rates, and stability of the exchange rate. The last criterion – ensuring price stability – could be met with in 2014.
Substantial progress needs to be made in structural reforms, as well. The privatization or restructuring process of state companies should continue, labor market flexibility and employment should grow, and the deregulation of energy prices administered in the 2014-2017 period and natural gas prices administered in the 2014-2018 period should be completed.

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