Prime Minister Mateusz Morawiecki: The euro is a choice and not a necessity
10.01.2023
At a press conference, Prime Minister Mateusz Morawiecki shared his initial findings on the current situation in Croatia. On 1 January 2023, Croatia joined not only the Schengen area but also the euro area. The change of currency, from the Croatian kuna to the euro, is currently causing great turmoil - the prices of many services and goods have risen dramatically in a short period and the Croatian government has to intervene. We can clearly see that in a time of global crisis, such a step as the change of currency has compounded many negative effects within the economy - most notably inflation. In Poland, the government is working to bring the wages of Poles up to the standard of richer Western European countries. Only then will it be possible to possibly discuss the adoption of the European currency in our country.
Croatia in the eurozone from 1 January 2023
The people of Croatia have seen a sharp rise in some prices upon joining the eurozone. The inflation present throughout Europe was further boosted with the introduction of the euro. Despite the transition period between the two currencies, the Bank of Croatia anticipated a one-off increase in inflation after the changeover. However, higher inflation could become entrenched as the European Central Bank's decisions must take into account the euro area as a whole. Actions taken by the European Central Bank may thus prove ineffective in some countries with a different economic level from the rest.
"The inflationary chaos, which is causing so much trouble for the people of Croatia and is being signalled in various ways, is a very serious warning for us," emphasised Prime Minister Mateusz Morawiecki during a press conference.
The euro is a choice, not a necessity
Following Croatia's accession to the eurozone, there have been voices in the Polish political debate that Poland should consider a similar step. However, Prime Minister Mateusz Morawiecki stressed that this would be extremely risky and unprofitable - especially looking at the experience of other countries in our region. The head of government also stressed that first of all, Poles' wages should be brought up to Western European standards. This would open up the field for talks about changes in monetary policy.
"As long as it is not profitable to talk about the euro, this conversation is pointless. The discussion on whether Poles want to be paid in euros will not affect the amount of money they have in their wallets," concluded the Prime Minister.
The instruments to combat the crisis are in our hands
During economic downturns, countries should be able to respond flexibly. The loss of the independent monetary policy is probably the biggest drawback of joining the euro area. Prime Minister Mateusz Morawiecki reminded the audience that Poland has the instruments to fight the crisis and thus it is possible to effectively protect Poles from rapid changes.
"This is what we have done: the shields, monetary policy, which is in our hands, our fiscal policy, financial policy - these are all flexible economic policy instruments that we have used to relieve the Poles at least a little bit in these difficult times of very high inflation," said the head of government.