The impact of adopting the euro currency for the Romanian economy

• Author: Mandescu, I.
• Position: PhD. Student, Lucian Blaga University of Sibiu
• Pages: 207-212

Bulletin of the Transilvania University of Braşov • Vol. 6 (55) •No. 1 - 2013

Series V: Economic Sciences

THE IMPACT OF ADOPTING

THE EURO CURRENCY FOR

THE ROMANIAN ECONOMY

Ionel MNDESCU

1

Abstract: Given that Romania joined the Europea n Union in the hope that

in the future the population will ha ve a standar d of living similar to tha t of

the community, at present we should continue the efforts to fulfil a ll the

necessary conditions of entry into the gr eat Eur opean family. Regardless of

the economic problems that our country is facing to join the euro zone,

imposed by the need to fulfil the convergence criteria , the adoption of the

euro by Romania ca n be an important achievement of our country, resulting

from a susta ined process tha t started many years a go. Although the political

decision makers ha ve set a 2015 deadline for the completion of this pr ocess,

the ado ption of the euro cur rency should not be seen as a purpose itself, but

should be followed for the benefits it could bring to the Romanian

population.

Key words: euro a rea; cost; benefits; European Monetary Un ion; eur o;

convergence.

1 PhD. Student, Lucian Blaga University of Sibiu.

Lately, the adoption of the euro currency

in Romania has been an intensely debated

topic nationwide. The political decision

makers have set the year 2015 as a

deadline for the completion of this process,

and in cooperation with factors in the

economic and monetary area the fulfilment

of all the necessary conditions to join the

euro area is targeted. Based on that, the

study of the preparation of the Romanian

economy for the entry into EMU is of huge

importance, both for the policy makers

mentioned above, as well as for the

academic environment. And last but not

least, the introduction of the euro currency

will affect the entire national socio-

economic environment, and the

consequences will occur before and after

the actual process of transition from the

currency leu to the euro.

Adopting the euro currency is

conditioned by the prior nominal

convergence criteria set by the Maastricht

Treaty, which refers to the inflation level,

budget deficit, government debt, long-term

interest rate and exchange rate stability.

Inflation in Romania had a downward

path, from 45.7% in 2000 to a minimum

below 5% in 2007. The massive increase

of prices for energy and food caused an

inflation slippage in 2008. Subsequent

emergence of the global economic crisis

effects and the implementation of

stabilization measures that included the

increase of indirect taxes and of the

administered prices led to maintaining a

high level of inflation. Since food and

energy commodities have a share of over