– I don’t see a fast path to joining the Eurozone – says Krzysztof Bosak, Vice-President of the Sejm on behalf of the Confederation, in an interview with DoRzeczy.pl.
DoRzeczy.pl: Two major newspapers simultaneously published similar articles about the need to join the eurozone. Can we expect pressure on Poland on this issue in the near future?
Krzysztof Bosak: Maybe. This would be a logical consequence of the clearly Brussels option coming to power in Poland. However, I do not see a quick path to joining the eurozone; Poland does not meet the convergence criteria. Of course, some steps can take place, such as reappointing representatives for the preparations and efforts to familiarize society with this topic. This is how I interpret these articles. It’s about clearing the ground, preparing society. There is no social acceptance in Poland, and joining the eurozone requires a constitutional change.
What would joining the eurozone mean for the Polish economy?
Predicting economic reality with such major changes as entry into the Economic and Monetary Union is very difficult. First of all, this means reducing economic sovereignty and depriving the Polish state of many instruments to implement its own economic policies. This is tying hands on countless issues.
Getting rid of your own currency means giving up your own exchange rate policy, it means giving up the ability to implement an interest rate policy and thus control the supply and price of credits in the economy. Next, it means giving up independence in the area of fiscal policy, something we partly gave up in the European Union when we joined it. For the time being, these are soft obligations, but upon joining the eurozone the national central bank will become part of the Eurosystem of central banks, which translates into the state’s fiscal policy and reduces its autonomy. The ability to independently monitor the entire financial markets is lost.
Joining the eurozone implies introducing appropriate financial supervision of individual financial market sectors, such as the capital market, the banking market, the insurance market and the pension fund market. All these major sectors of the financial market are subject to appropriate supervision and have head offices in Brussels, Paris and Frankfurt. The state can no longer manage economic policy through supervisory instruments such as the Polish Financial Supervisory Authority; the state would only be an executive body for the EU institutions.
What about the arguments of proponents of joining the eurozone?
I believe that in the 21st century, where finance is the lifeblood of the modern economy and the rules that govern economic life, abandoning these instruments is political and economic suicide. On the other hand, proponents of joining the Eurozone put on the table the reduction of exchange rate risk, but it should be noted that this decreases only in the European direction, but remains in other directions. The modern financial market has developed instruments that allow companies to reduce exchange rate risk and protect themselves against it. Then there is the final problem: the cost of access to credit, which is a problem for the Polish economy, is high. In my opinion, these two possible benefits are not worth all these costs. Moreover, it is worth emphasizing that the current entry into the Eurozone is an irreversible process, as the Southern countries experienced during the Eurozone crisis.
Source: Do Rzeczy
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
