The Euro has come a long way since the first 11 countries joined the club on the 1st January 2001. The last new country to join was Lithuania who gave up the Litas at the start of 2015. All EU member states except Denmark are required to adopt the Euro as part of their membership of the EU, however the timescale for joining is up to the individual country to decide. Each country must meet a set of ‘convergence criteria’ before being allowed in.
These criteria simply put are:
1) Low inflation rates
2) No excessive government deficit
3) Existing currency pegged to the Euro for two years (ERM II)
4) No high interest rates
5) A legal framework that’s ready for Euro membership
Below we’ll look at the countries who are either in the process of joining or who could join at a later date.
Closest to membership: Croatia
Out all the EU countries outside the Eurozone, Croatia is the closest to joining the Euro.
The Croatian government have set a date of 1 Jan 2023 for formally replacing the Croatian Kuna.
Polls in the country show overwhelming support for membership (over 60%.)
They are well ahead on their journey, having been in ERM II since July 2020 and have their new coins designed and ready to be minted.
Euro by 2024: Bulgaria
Like Croatia, Bulgaria is also part of ERM II having joined on the same day in 2020.
Over 50% of the population are in favour of swapping out the Bulgarian Lev with the Euro.
The Bulgarian government have set a joining date of January 1st 2023. They have many of the formal plans in place and already meet many of the convergence criteria.
A kink in the road however could be ongoing political instability which the country has been engulfed in recent years.
Wanting to join: Romania
Despite not being in ERM II, the Government of Romania have an ambitious target to be in the Eurozone by the end of the decade.
Plans are in place to join ERM II and the country is overwhelmingly in favour with over 75% of the population in support. The country fails though to meet many of the economic criteria especially on interest and deficit rates.
Whilst there is a domestic appetite for replacing the Romanian Leu, it looks like they are currently a long way from joining yet.
Not on the agenda yet: Czechia
Well over 60% of the population are against the introduction of the Euro.
Interestingly, on the economic front, Czechia is well placed to join, meeting many of the convergence criteria.
Joining is a matter of domestic politics which after recent elections is currently in a turbulent state.
Playing hardball with the EU: Poland and Hungary
Hungary and Poland are both currently in the middle of very tense relations with the EU in general. Hungary is vehemently against joining with just under 70% opposed, yet in Poland, polls show 56% of people in favour of joining. At present, both countries governments are firmly opposed to membership yet many in the opposition are in favour of starting the process. Like Czechia, it will be a matter of domestic politics as to when these two countries join the club and give up the Polish Zloty and Hungarian Forint.
Scandinavian exceptions: Denmark and Sweden
Scandinavia as a region has a fascinating relationship with the Euro and the European Union. To start Norway isn’t a member of the EU at all, so the NOK won’t be being replaced any time soon. Their neighbours however in Finland replaced the Finnish Markka with the Euro in 1995.
Sweden presents an interesting case. They are required to join the Euro as part of their treaty obligations. Whilst they meet many of the economic criteria conditions, joining is simply not on the cards. In 2003, the people voted against membership of the Euro by a 56–42 percent margin. Since then, it has become a dead issue in the country. Opinion polling consistently shows well over 50% of the population wanting to keep the Swedish Krona.
Denmark is the exception to all the countries listed above. Denmark currently meets the first 4/5 criteria for joining. They are members of ERM II with the Danish Kroner pegged to the Euro. However, unlike everyone else, they have a treaty opt-out meaning they are not required to join at all. In 2000, membership was rejected in a referendum by a 53-47 percent margin. Since the Euro crisis in 2011, polls have consistently shown opposition to any attempt at joining the Euro.
Opinion polling data found here: https://europa.eu/eurobarometer/surveys/detail/2284