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New Euro-criteria by the National Bank

September 14th, 2017

As the National Bank deems that Hungary should approach the European average before joining the Euro-zone, a business analyst believes the new criteria outlines by the issuing bank are two severe.

In a statement issued last week, the National Bank said Hungary should not join the Euro-zone until its per capita GDP reaches 90 per cent of the European average and before it pushes down public debt below 50 per cent of GDP. A further three criteria deemed necessary before the Euro is introduced concern financial competitiveness.

In his analysis of those five preconditions on Portfolio, István Madár welcomes the MNB statement as a long overdue opportunity for a public debate over how and when Hungary should join the Euro-zone. Nevertheless, he fears that those conditions are not to be met in the foreseeable future. In addition, he sees the introduction of the Euro as a means rather than as an outcome of convergence. If the Euro were a hindrance in countries with per capita GDP values below 90 per cent of the average, he explains, 10 out of the 19 Euro-zone member countries should never have joined. Moreover, Madár adds, their membership hasn’t prevented any of them from propping up their performance.

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