The eurozone, which was joined by Latvia as the second-to-last, but which the last full-fledged member became Lithuania, suspended the expansion process for an indefinite period.
Those, who want to join it (like Montenegro, which without prior arrangement introduced euro as the national currency), are not admitted to. But those, whom the eurozone wouldn’t mind to swallow (like Poland with zloty and Czechia with koruna), don’t want to go there.
As a result, the pause has dragged on and, as the minimum, over the next two years the eurozone will not expand – the 20th member will not join the present 19 member states. If for no other reason than because shortly before joining the eurozone each country – candidate should complete a two-year ‘beginner’s training’- to withstand the test by the European Exchange Rate Mechanism ERM II. But neither Poland, nor Czechia, nor Hungary (setting aside Sweden and Denmark) are interested in ERM II and they don’t hurry to following in the footsteps of Latvia.
Interestingly, by concluding an agreement on the accession of the EU, each country undertook to introduce the European currency (except Denmark, which haggled over the right to decide the currency issues via referendums). But agreements on the accession of the EU do not prescribe any particular deadlines for the introduction of euro. Therefore, quite successful from the economic standpoint countries do not hurry to abandon rather viable mechanism of control over the economics and to transfer currency levers under the supervision of a supranational body – European Central Bank.
Moreover, not just new countries do not hurry for the single European currency, but also an old timer of the eurozone – Finland – bethought of the sense of the currency union. At the end of the last year a petition on exit of this country from the eurozone mustered necessary 50 000 votes, which means that it must be considered in Eduskunta – Parliament of the country. To be sure, Eduskunta will not abandon euro, but against the background of the June referendum on exit of Britain from the EU, the narrowing of the eurozone does not seem something from science fiction any more.
Especially since the eurozone ceased to be the zone of stability. Over the recent years, there have been two main problems – Greece and deflation.
Consumer prices in the eurozone in March 2016 reduced by 0.1% on a year-on-year basis after 0.2% fall a month earlier. Obviously, the energy carriers exert substantial downward pressure on general inflation, but inflation in the eurozone remains lower than the target value of the ECB, which makes up 2%, for three years by now, despite lowering of interest rates to the all-time low levels, as well as the quantitative easing programme.
As for the replacement of euro for an old good drachma in Greece, now such probability has significantly lowered if to compare with the situation, when the year before the Prime Minister of Greece Alexis Tsipras laid down conditions to the Euro – locomotive Germany. Pacification of Athens cost to the eurozone neighbours one third of million euro. Hardly the authorities of the currency union would wish to repeat the experiment. It is cheaper to put out a problem-plagued colleague on pasture than to plug holes in the other’s budget — the euro – vessel is not bottomless at all.