Hungary warned not to postpone euro adoption

Putting off accession to the euro-zone could harm the Hungarian economy, European Economic and Monetary Affairs Commissioner Olli Rehn responded to a question by Edit Herczog, a Hungarian member of the European Parliament.

"What action can the Commission take in the event of the government of a Member State imposing an economic and budgetary policy on the country which results in an indefinite postponement of its joining the euro area, to which it committed itself in the Accession Treaty?," Hungarian Member of the European Parliament (MEP) Edit Herczog asked the European Commission in July.

"The EMU chapter in the Treaty on the Functioning of the EU (TFEU) indeed prescribes that all Member States (except Denmark and the UK, in view of their opt-out clauses) are committed to adopt the euro as soon as they achieve a high degree of sustainable convergence towards the euro area," Rehn responded in August.

He added, however, that the TFEU "does not prescribe the timing of euro adoption and allows time for each Member State to make the necessary adjustment and preparations for euro area entry."

"In practice, it is up to the Member States to decide on the strategy and timing for meeting the convergence criteria. That said, the commitment to adopt the euro remains and cannot be reversed," he explained.

Hungary’s government has made rather clear statements a number of times regarding euro adoption, from which market players concluded that the cabinet is not in a hurry to join the euro-zone and the adoption of the single European currency should not be expected before 2020.

Prime Minister Viktor Orbán told a meeting of the National Association of Entrepreneurs and Employers (VOSZ) in late July that he agrees with a proposal by VOSZ Chairman Sándor Demján (one of Hungary’s richest men, head of real estate giant TriGranit) that staying away from the euro should be enshrined in the agreement between the government and the association. By this the PM accepted the tycoon’s proposal made in 2010 that Hungary should adopt the euro but not at all costs. Demján said in late July that "we are not getting further from the euro, but the euro is also getting further from us."