Ukraine’s crisis means that Poland needs to reconsider its skepticism toward adopting the euro, said Marek Belka, the neighboring country’s central bank chief.
“The Ukraine crisis shows that it’s worth making a bigger investment in the European Union and reconsidering the question of Poland’s euro-area membership,” Belka told reporters in Warsaw today.
Poland, which joined the European Union a decade ago, was forced to ditch its plans to adopt the euro in 2012 as the debt crisis almost tore the currency bloc apart. Since then, Belka has said there’s no rush to join before the euro area is fixed, while insisting Poland should do so on its own terms.
Russian forces took control of Ukraine’s southern region of Crimea after an uprising in Kiev triggered the ouster of President Viktor Yanukovych. The worst standoff between the West and the Russia since the end of the Cold War sent the zloty to its weakest level against the euro in almost a month.
Poland’s currency weakened 0.7 percent today to trade at 4.1896 per euro as investors fled to haven assets.
“The comments from Belka suggest that the risk of increased market volatility is becoming a source of concern for the central bank,” said Jaroslaw Janecki, an economist at Societe Generale SA in Warsaw. “Euro membership would undoubtedly remove the currency risks that Polish economy is exposed to, but that’s still a question of years, not months, because some eligibility criteria haven’t been met.”
Poland may seek to ease the adoption terms that would compel the government to peg the zloty to the euro for two years or more, Foreign Minister Radoslaw Sikorski said in a Feb. 14 interview. The EU’s largest eastern member will make the currency switch “when it’s safe and profitable,” Finance Minister Mateusz Szczurek said last month.
Events in Ukraine, the eighth-largest market for Poland’s exports, don’t “help in conducting safe, stable economic policies, including monetary policy,” according to Belka. That means “more responsibility for the central bank,” he said.
The monetary authority is ready to extend aid to Ukraine through its bilateral loan to the International Monetary Fund and will support a “generous, realistic” aid program for its neighbor, Belka said.
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