Romania's macroeconomic achievementsfor joining the unique european curency

AuthorSilvia Popescu
PositionAssociated Professor, Ph.D., Economics Faculty, ?Titu Maiorescu' University, Bucharest
Silvia Popescu
The Romanian government has announced plans to join the eurozone by 2015. Currently,
the leu is not yet part of ERM II but plans to join in 2010-2012. The economic advantages of the
monetary union grow with expansion of the Euro zone. There is also a high level of skepticism; the
main fear about the Euro is the inflation –that is considerable promoted by the Euro currency’s
exchange rate in comparison with 2002; another restraint is due to member states inability to
establish their own interest rates. The IMF arose the option of joining the Euro zone criteria
relaxing. A one-sided Euro’s joining was suggested by International Monetary Fund on
March-April 2009, in a confidential report mentioned by The Financial Times as the emergent
states in Central and Eastern Europe to be able to pass to the unique currency, but not being
represented in the Central European Bank Board. By its side, CEB considers that emergent states
of the European Union must not pass to the unique currency unilaterally, because such a fact
could under-mine the trust in Euro currency worldwide. This option would hardly deepen the
macroeconomic controversies inside the Euro zone and would contradict the previous conditions
already imposed. An acceptable solution could be the fastening of emergent countries joining the
Exchange Rate Mechanism 2, after they are aware of risks arisen by such a step. The European
Commission endorses in the Convergence Report on 2010 that Romania doesn’t meet any criteria
needed by passing to the unique European currency, respectively: prices stability; budget position
of the government; stability of exchange rate; interest convergence on long run and there are also
law impediments. Our paper discusses arguments for a faster passing to the Euro currency versus
arguments for a late joining the Euro currency in Romania.
Keywords: Euro currency, the economic depression, stability of exchange rate, monetary
policy, the financial depression.
Theoretical foundation of optimum currency area (OCA) was pioneered by Mundell (1961)
and further developed by McKinnon (1963), Kenen (1969), Tavlas (1993), Bayoumi and
Eichengreen (1996) and others. Frankel and Rose (1996), found a strong positive relationship
between business cycles correlation and trade integration as the participation to a currency union
increases the integration of collateral trade which lead to greater business cycles synchronization;
Beside the nominal convergence criteria, the states who want to join a monetary union have to take
into consideration also the real convergence criteria: business cycle synchronization, demand and
* Associated Professor, Ph.D., Economics Faculty, „Titu Maiorescu” University, Bucharest (e-mail: This work was supported by the strategic grant POSDRU/89/1.5/S/62259, Project
”Applied social, human and political sciences. Postdoctoral training and postdoctoral felowship in social, human,
and political sciences” cofinanced by the European Social Fund within the Sectorial OperaYional Program Human
Resources Development 2007-2013.

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