Why Hungary Is Unlikely to Adopt the Euro Anytime Soon
Despite the widespread use of the euro across much of Europe, Hungary has yet to adopt this common currency. This article explores the reasons behind Hungary's reluctance to join the eurozone, examining political, economic, and ideological factors.
The Role of the Fidesz Party
One of the primary reasons Hungary has not adopted the euro is the resistance from the ruling Fidesz party. While some argue that the Fidesz party simply doesn't want a currency that might be seen as too foreign, the underlying reasons are more complex. The party, led by Prime Minister Viktor Orbán, is deeply entwined with Hungary's domestic currency, the forint, for both political and economic reasons.
Why would you want this bland thing in your wallet… when you could have all these?
History and Independence
The forint has a rich history that has lasted over 100 years, as opposed to the euro's relatively short lifespan. Hungarian authorities argue that the forint works well within the country and there is no immediate need to switch to an imposed new currency. Adapting to a currency used primarily outside Hungary would require significant changes in financial systems, trade, and economic policies.
... the euro is 'no business.'
Economic Considerations
Another significant barrier to adopting the euro is Hungary's economic status. The country's economic performance has not been stellar, with issues related to inflation and exchange rate volatility. Hungary's forint serves as a buffer, providing stability and independence in the face of global economic pressures.
Because they have not yet fulfilled all the necessary requirements to be able to join the euro.
Political Ideology and Sovereignty
Prime Minister Viktor Orbán and the Fidesz party view the continued use of the forint as a symbol of Hungarian sovereignty. Adjourning the euro could be seen as giving up on this aspect of national identity. Hungary has historically been an independent-minded nation, and the idea of losing control over its currency is not easily accepted by the current political leadership.
The reluctance to adopt the euro also stems from concerns about EU criticism. The EU often accuses Hungary of having an independent mindset, and allowing Brussels to control Hungary's currency could lead to increased scrutiny and political pressure.
From what I understand, the Hungarians are possibly the most independently minded people in their geographic area. Why would they give up their own sovereign currency?
Potential Future Developments
Despite the current stance, the political and economic landscape could change in the future. Hungary's path may diverge from that of the eurozone, possibly leading to a split with the EU. Some speculate that in 5-10 years, Hungary and other Central European countries could form a federation and move away from the EU framework.
This is bad news for the EU because Hungary was always the canary in the coal mine: Hungarian events foreshadowed larger trends.
Conclusion
While there are valid arguments for Hungary to adopt the euro, the political and economic obstacles remain significant. The Fidesz party's resistance, economic concerns, and ideological commitment to sovereignty all contribute to Hungary's current stance. As the region and global economy continue to evolve, the possibility of a shift in Hungary's monetary policy cannot be ruled out.
It's quite possible that within 5-10 years, the Central Europeans V4, Croatia, Slovenia, maybe Austria too, will coalesce into a federation and split from the EU.
For now, Hungary's forint remains a symbol of national pride and an essential part of the country's economic landscape.