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May 9, 2021

National Bank hosts conference on the future of the eurozone. Bruegel think tank’s Sapir: Romania shouldn’t rush joining eurozone because of real convergence issues

Romania should not rush to join the eurozone because of the inherent real convergence challenges, André Sapir, senior fellow at the Bruegel think tank, on Tuesday told a conference hosted by the National Bank of Romania on the future of the eurozone.

The question is: will Romania be the next, and when will this happen? I suppose that Romania and Poland will have to adopt the euro. So the question is not if, but when? In 2016 we saw that Romania was on the right track and was meeting the nominal convergence criteria. As I said, real convergence counts at least as much as nominal convergence and I believe that adopting the euro today does no longer imply the same as the process implied in the past. In my opinion, any country that joins the euro area now joins the Economic and Monetary Union 2.0, not 1.0, and this is something different. I think many of the shortcomings of the Economic and Monetary Union 1.0 have been solved, therefore I think we should be headed for EMU 3.0, but EMU 2.0 is doing quite well too. It means you will join a more robust euro area, with better mechanisms, and in my opinion this is what you should take into account in deciding whether you want to join the monetary union or not. However, I think that Romania should not rush, that’s my opinion, because of the real convergence issue that goes along with joining the euro area, said André Sapir.

He further explained that in the meantime Romania, which has quite a number of banks whose parent companies are based in the eurozone, should consider joining the Banking Union.

In the speech delivered at the opening of the conference, BNR governor Mugur Isarescu highlighted the importance of the subject for Romania and mentioned that the country needs a healthy economy to adopt the euro under favorable terms.

“From our point of view, the euro’s adoption is a strategic goal for Romania, but this strategic goal needs a healthy economy so that we can join the euro under terms that are favorable to us. On the other hand, as I said, Europe faces many challenges regarding the functioning of the euro area and of the European Union in general. We must accept that the euro area is a target that evolves over time, it is not a fixed, but a dynamic target, it changes over time, and therefore we, just like other countries that haven’t adopted the euro, are asking ourselves what the future of the eurozone will be, what this future will look like and what are we headed for. Romania can and must play a role in the ongoing debate on the future of the European Union and especially of the euro area,” said Mugur Isarescu.

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