World of Coins

Euro coins => New euro countries => Topic started by: Figleaf on February 02, 2011, 10:36:29 PM

Title: Who's next?
Post by: Figleaf on February 02, 2011, 10:36:29 PM
With Estonia into the euro, who would be next? Here's my take:

1 and 2. Latvia and Lithuania - both need only a humming economy to meet all the criteria. They will benefit from the growth spurt I expect in Estonia, so they are best positioned.
3 and 4. Bulgaria and Denmark - both have pegged their currency to the euro, putting them in a position where they have to accept the decisions taken in Frankfurt, while they have no voice in the discussion. The Bulgarian economy is weak, though and Denmark is pretty virulently eurosceptic.
5 to 9. Czechia, Romania, Hungary, Poland, Sweden - a coalition of the unwilling?
10. The UK, if the pound or the economy collapses. Neither likely, nor excluded.

Next question is "when"? I think there will be reforms when the currency dealers finally realise the euro is safer than USD or GBP and calmer times prevail. I think the gnomes of Frankfurt will resist any new members before the reforms are concluded, but will have no problems with Latvia or Lithuania afterwards as long as their stats look good.

Peter
Title: Re: Who's next?
Post by: akona20 on February 02, 2011, 11:24:15 PM
The world awaits these changes that Peter has indicated. The more the merrier. Time to take a stand with strength against the old major currency of the world.
Title: Re: Who's next?
Post by: chrisild on February 02, 2011, 11:46:10 PM
Frankly, I don't care. (I may have mentioned that before. :) ) In the European Union we will "always" have member states that use the common currency, and others that don't. So if any country that is in theory obliged to join the currency union would rather stay outside, why not?

That being said, there are three countries in the EU that already participate in the Exchange Rate Mechanism: Denmark, Latvia and Lithuania. DK has an opt-out, so forget about them. LT and LV could be next but that may take some more years. http://ec.europa.eu/economy_finance/publications/european_economy/2010/pdf/ee-2010-3_en.pdf

Christian
Title: Re: Who's next?
Post by: Tom0000 on February 04, 2011, 03:41:17 PM
11. Andorra ?

No , I think it can be the first country which will start minting own euro money.
Title: Re: Who's next?
Post by: chrisild on February 04, 2011, 04:34:28 PM
Andorra is in a different situation. The country is not an EU member state, and does not intend to become one. However, a monetary agreement (similar to what the EU has with Monaco, San Marino and the Vatican) is possible indeed. Last month Andorra and the EU were in negotiations that will also pave the path, so to say, for such a monetary agreement. Guess that will one day result in Andorran euro coins. Here are two media releases (in Catalan) from this week:

(02-02-2011) http://www.govern.ad/?p=13299
(03-02-2011) http://www.govern.ad/?p=13356

Christian
Title: Who's next?
Post by: Bimat on February 12, 2011, 10:58:42 AM
Lithuanian mint is ready to strike Lithuanian euro coins:

See Bank of Lithuania's report (and a short video):

http://www.lb.lt/euro

Aditya
Title: Re: Who's next?
Post by: chrisild on February 12, 2011, 02:15:59 PM
Maybe, maybe not. "The National Changeover Plan was approved by the government in September 2005 and updated in April 2007. Lithuania has not set a changeover target date." http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SEC:2010:1373:FIN:EN:PDF  Also, at the bottom of this page http://www.lb.lt/convergence_criteria_and_their_implementation the Lithuanian central bank has a list of the convergence criteria and whether/how they are currently met or not met.

Christian
Title: Re: Who's next?
Post by: Figleaf on February 12, 2011, 06:57:30 PM
Latvia has set a date: 1/1/2014. From a PR and foreign policy point of view, not setting a date is smarter - if you miss the target date because the EU is being difficult, you don't have to explain and no one is disappointed. No one can even claim you missed the target date.

From a domestic political point of view, setting a date means putting pressure on the participants in the procedure. This is a very helpful trick to get something done in a bureaucracy.

Peter
Title: Re: Who's next?
Post by: chrisild on February 12, 2011, 07:12:44 PM
Was the year for Latvia a typo? In the document that I quoted from (dated mid-December), the Commission says that "the Latvian government set 1 January 2014 as the target date for the introduction of the euro". As for Lithuania, they did indeed learn the hard way, about five years ago, that targets can be missed ... and that even a negative outlook can influence the decision.

Christian
Title: Re: Who's next?
Post by: Tom0000 on March 03, 2011, 04:00:00 PM
The last crisis has showed the hole in the common currency idea. We can have common money but without common financial politics it will be very weak idea.
The last reforms after the crisis are not enough deep for make Europe's system flexible and safe . Many countries prefer independence in national fiscal politic over the common interest. Europe has to select : safe and strong money or particularistic national interests.
I am not sure what can encourage more countries without euro in circulation to use it , but I am sure Europe need deep reforms and resignation by all euro countries from some fiscal independence rights. If this will not happen , the other money will be the replacement for weak dollar. It can be China's yuan :) This is not possible now, but China has the same time like Europe. Who will lost it and who will win ? Maybe USA will fix his dollar ? We will see.
Title: Re: Who's next?
Post by: chrisild on March 03, 2011, 05:31:14 PM
Many countries prefer independence in national fiscal politic over the common interest. Europe has to select : safe and strong money or particularistic national interests.

Agreed, except that the latter seems to be more important for most in Europe these days. As far as China is concerned, as long as the yuan renminbi is basically an internal currency only, it will not play a major role internationally. But things have begun to change. http://www.bloomberg.com/news/2011-03-03/yuan-may-strengthen-faster-on-liberalization-steps-socgen-says.html  And that "trend" may well continue if more transactions can be yuan based in the future, and if several countries use it as a reserve currency ...

Back to the euro area, I still hope that the governments of the euro area get their act together. While it is extremely unpopular to give any of the remaining "national sovereignty" up, that is inevitable in my opinion too. But who knows what insights or priorities will ultimately prevail. The "next" countries that could (as in: might, possibly, who knows 8) ) introduce the euro in the not-too-far future are Andorra (monetary agreement maybe), Denmark (depending on a referendum and its outcome) and Latvia (see previous posts). But we should not hold our breath; that only results in a red face after some time. ;D

Christian
Title: Re: Who's next?
Post by: Figleaf on March 03, 2011, 06:10:10 PM
The yuan is useless as an international currency and wil remain so for the foreseeable future. Of course it is not fully convertible, but that may eventually change (I am personally pessimistic on that happening. The Chinese government is a collective of control freaks.) What will not go away is that nobody wants to buy the yuan in bulk.

Consider the case of the Japanese yen. Contrary to China, Japan is a developed, modern country with a pool of people who understand sophisticated financial market techniques. It has perfectly good banking supervision and it is politically stable. Yet, the yen is not an international currency. Japan has a deflation problem, a government budget problem and its government is simply not interested in Japan being an international financial centre, with the consequent violent money flows. That is enough to limit the role of the yen to local currency. Journalists are seldom interested in such boring details.

Peter
Title: Re: Who's next?
Post by: Figleaf on July 23, 2014, 11:57:37 PM
All of our above predictions have proven correct (though Lithuania was one year off, nobody predicted they'd make the deadline.) Now that Lithuania is on the path towards introduction, I predict that Bulgaria will be next. It would profit from the Greek recovery, giving it a shot at stable government financing. It has long been a staunch Russian ally, having been liberated from the Ottoman empire by Russian troops, but post-communist Russia has done much to make them appreciate the EU, NATO and the euro. There is a larger than zero chance that Bulgaria and Romania will be admitted together, but expect the Bundesbank/ECB types to be difficult. Unlike the Baltic states, the Balkans are seen as unreliable.

The risk of this prediction is that either Sweden or Denmark changes position on the euro. One would probably drag along the other. That risk seems to be small these days. While Poland, with a long border with Russia, will increasingly like the euro, its governance is too chaotic to get there any time soon. Prague is as sclerotic as Washington, if not worse. That leaves Hungary. It seems totally disinterested either way.

Peter
Title: Re: Who's next?
Post by: chrisild on July 24, 2014, 12:17:35 AM
Why would anybody want a country like Viktor Orbán's Hungary in the currency union anyway? In my opinion, the euro area is fine the way it is (or rather will be as from 1-1-15). Stability, or at least working on it, is a more important issue than sheer size or growth.

Christian
Title: Re: Who's next?
Post by: ART on August 23, 2016, 10:53:42 PM
Even if we would have Hungary in, Orbán doesn't want to... against the will of the absolute majority of the population.
Title: Re: Who's next?
Post by: chrisild on January 12, 2018, 12:00:48 AM
Bulgaria plans to join the Exchange Rate Mechanism (ERM-II) some time this year - the antechamber of the currency union so to say. (Currently the Bulgarian currency is unilaterally tied to the euro.) According to finance minister Vladislav Goranov, the application will come in the first half of this year - that is, in the six months of the Bulgarian presidency of the Council of the European Union. More here (http://www.euractiv.com/section/economy-jobs/news/bulgaria-expects-to-apply-for-eurozone-waiting-room-by-july/) for example.

Now whether this is just hot presidency air ;) or more remains to be seen. Even if the Bulgarian lev joined the ERM-II in mid-2018, it would stay there at least until mid-2020.

Christian
Title: Re: Who's next?
Post by: Figleaf on January 12, 2018, 07:07:47 PM
Very interesting and excellent fun. I had a look at Bulgarian economic indicators. They looked much better than I thought. Per capita PPP GDP is climbing nicely, inflation is low, unemployment (below 7%) also, balance of payments looks fine, gov't budget is in deficit, but looks manageable and debt to GDP is just below 25%! I'd like a stern audit of those figures to prevent another Greece from happening, but otherwise this looks excellent, especially for a country that has a history of economic weakness. You are right that it may be just hot air, but the stats say they can do it if they want to, especially if they take their time.

Peter
Title: Re: Who's next?
Post by: chrisild on January 12, 2018, 10:04:09 PM
One problem that Bulgaria has, apparently to a higher degree than most other member states, is corruption and a lack of transparency. We will see whether that issue has any influence on the decision to let the lev into ERM-II ...

What I do appreciate is the signal that the presidency sends with regard to the currency union. You would certainly not hear anything like that from Warsaw, Prague or Budapest (and judging from how the governments act there, this is probably good for the euro area), but here we have a government that basically says Yes. :)

Christian
Title: Re: Who's next?
Post by: chrisild on July 05, 2019, 11:43:15 PM
The Croatian government seems to have plans with regard to the euro: It wants the country (well, its currency, the kuna) to join the Exchange Rate Mechanism (ERM-II) in mid-2020. Source: Euractiv (https://www.euractiv.com/section/economy-jobs/news/croatia-launches-bid-to-join-euro-waiting-room/). The Croatian central bank has a press release here (https://www.hnb.hr/-/republika-hrvatska-uputila-pismo-namjere-o-ulasku-u-europski-tecajni-mehanizam-erm2-) (in Croatian; the English pages have not been updated yet).

Christian
Title: Re: Who's next?
Post by: eurocoin on July 06, 2019, 08:55:29 AM
Interesting, if everything goes according to plan on 1 January 2022 Bulgaria will introduce the euro and on 1 January 2023 it will be introduced in Croatia.
Title: Re: Who's next?
Post by: Figleaf on July 06, 2019, 03:02:22 PM
Craotia has been doing quite well in the last few years. GDP/Capita rose nicely from 13 600 in 2014 to 15 900 in 2018. Inflation is in line with much of the rest of Euroland at around 1%. Unemployment is at a record low of 7.5%.

However, government debt/GDP is quite high at 74%. With the economy going so well, tax income must be rising, but it would still be good if the government would be seen pruning dead wood in government expenditure. EU growth prospects are stable, so within a time frame of three years there is enough time to bring the government debt/GDP ratio down sharply. Apparently, the market expects this to happen, as the 10 year government bond rate has receded from over 2% to a record low of 1.24% in July 2019. This is an excellent opportunity to roll over government debt at lower cost, reducing the debt/GDP ratio even more.

Politically, this is a positive signal. It says EUR is an attractive option, in the face of opposition to the currency in the government of nearby Italy. If the government succeeds in reducing its debt, Croatia should be a very attractive candidate. EUR should strengthen the most important sector of the Croatian economy: tourism. Its coast line should be the first to profit.

Peter