Czech rules out Euro adoption

Czech government ruled out adopting euro as its currency for now and the country will not put any effort to enter the exchange rate mechanism next year, said Czech Prime Minister Petr Necas on Thursday.

I have to say that the government has ruled that the decision not to set the date for joining the eurozone for now is a recommendation the government is backing, he was quoted as saying in Prague Daily Monitor.

Czech prime minister earlier said that it would be more beneficial for the country if it continues national currency-the crown in future.

The government also made it clear that it would not try to enter the exchange rate mechanism in 2011. The mechanism provided a period of time for the countries adopting euro to show that their currency is stable before becoming a eurozone member.

However, Necas said that the country already meets some of the requirements to adopt euro except its public finance which is higher than required.

For example, the price stability criterion has been met. Our economy has also complied with the criterion of long-term interest rates, he said.

Regarding exchange rate stability criterion, Necas noted that it can be can be evaluated only when the country enters the exchange rate mechanism.

“Neither the Czech Republic, nor the eurozone, are prepared for Czech eurozone entry. As for the eurozone, it now has to work to secure its own stability,” said the report quoting David Marek, chief economist at Patria Direct.

Currently, euro is the official currency 16 of 27 member countries in the European Union. Estonia will become the 17th member of eurozone starting from January 1, 2011.