Core or Periphery?: Poland's Battle Over Embracing the Euro

[sysop]

Prime Minister Donald Tusk and the Polish business community want to boost competitiveness by introducing the euro. However, the opposition and a majority of Poles believe the country's independence and stability could suffer.

http://www.spiegel.de/international/...-a-881739.html

[pedromh]

I fear our Polish friends are debating Euro adoption based on a parameters of image and a desire to feel integrated into a modern Europe as opposed to sensible economic policy.

Would adopting the Euro really help Polish exporters? Only marginally. The shoemaker here exports to non Euro countries: Czech, Russia, UK, US, Canada. Whatever uncertainty and consequentially increased transaction costs are presented in having to balance the books with units sold into a foreign currency are marginal, at best, so long the zloty is stable. To the extent the cost is a factor, adopting the Euro only reduces it with trade within the eurozone. Sweden, Denmark do just fine trading with Europe and the world without the Euro. We have advanced computers that can calculate the conversions instantly. Different currencies are not the large wall to trade it was made out to be.

Most of the internet sales are going to be done with credit cards. Visa and Mastercard do most of the work and absorb most of the risk.

If the benefits of the single currency are marginal, what of the risks? They are substantial. As we learned in comparing the US debt situation with EU countries, there is a lot to be said for having one's debt denominated in a currency you control. While much of Polish debt is already likely not in Zlotys, none of it will be if they adopt the Euro. Deliberately hard or soft currency policies during economically may not be a good option in all cases, but why take it off the table as a possibility for all time unless there is something to be gained?

Regardless of where you stand on the economic benefits of the single currency and its not worth while caught up in the image of the euro and the symbolism it implies or does not. Nationalists do no favours arguing that the Euro will make Poles less Polish. Pro-Euro groups do no favours arguing that Conservatives are reactionary and retreating from globalization behind a national currency.