The Euro, is it a good idea for Poland?

The euro will go down before Poland will convert to it, when euro will go down it will bring all currencies down in Europe the only one solution is to have your currency backed by gold to prevent collapse

I think it is idea worth of consideration but not before Euro stabilize and Polish economy will synchronize with Eurozone. So, 5 or 10 years? Definitely not now (on the other hand it would be probably good to enter with cheap currency... but it would demolish western economies ;-) so they don't let us now anyway :-))


Hm... I'm not sure about that, country unilaterally pegged usually don't have access to central bank loans, and is vulnerable to currency attack a'la Soros vs BOE. When country finally violently "unpegs" then all debtors are screwed, that is way Latvia is fighting so much to not "unpeg"...

Anyway, it would be nice to not have to change Zloty to Czech Korona everytime when I go skiing.. Life would be easier with one currency, but both Eurozone and Poland are not ready for that.

PS. comment by Forlana from "The Economist" forum:
"To put in another way, it is often said here in Poland that the Euro is a powerful tool for growth and an excellent shield, but a heavy one. Be sure you can carry it before you take it..."

very accurate allegory in my opinion

Very good indeed.

To be clear, I'm not for Poland taking up the Euro. There are, however, advantages that come with the Euro. For instance, it would make borrowing easier (the ECB has deep, deep pockets.)


It's far from a tiny bit. Currency devaluation is one of the keys to China's success (why do you think the US is so angry at them right now?) Cheaper exports, but also expensive imports. It's not "a tiny bit", it's a substantial amount (quite indeed.)

I think the doomsday predictions that costs would spiral out of control are misplaced. Costs would rise, but not astronomically. Be reasonable.

It depends, revaluation can be done in a controlled manner, again, just as Denmark has always done. If you are in control of your money supply, you control the exchange rate.

Latvia is screwed because they're already in ERMII and are stuck.


Borrowing doesn't seem to be a problem at the moment. Just hedge against fluctuation. Most governments did just that with their structural funds.


I think I managed to mix up conversion with devaluation.

Anyway, you've just made a great argument for not outsourcing monetary policy. The RMB is pegged as well. It's a great policy to protect them from the effects of monetary policy overseas. The Chinese really have it down. They are protected from attacks on their currency, and devaluation of the currencies of their trading partners. Their investments will never suffer too much from currency fluctuations.

The euro is bad for Poland precisely because that isn't possible. The NBP couldn't have devalued PLN over the last 18 months to make Poland attractive to foreign capital. Growth would have been dead in the water.

But hey, I like the ECB myself. They are doing what a central bank should be doing, attempting to control inflation...

I don\'t think euro will work in Poland.

Neither do I, at least not now.


Quite indeed.

Let me restate what I was trying to say: I don't think that the Euro is good for Poland (at least not now), but it's not all bad.

I was making a point about how energy (oil) is more expensive with a weak Zloty, but I forgot to also explain how oil dropped a lot, so it didn't really matter; although, oil is recently on the rise.

Anyway, my extended opinion on it is right here:

I oppose the adoption of Euro. Does anyone think Poland would have avoided the recession the way it has, had it not have had its competitive currency? The EU crisis has only begun and the bail out of Greece has proven that the Euro will be further devalued as the remaining PIIGS buckle under pressure. Poland recently told the IMF it doesnt need their credit line - good for them!

Euro would be Poland's noose.

It really depends on where you are coming from.

The Zloty fell about 20% because currency dealers can't tell the difference between Poland and Hungary :)
This however was a good thing for Poland, as it made exports cheaper and created more of a demand for internal consumption because imports were more expensive.

BUT such fluctuations are not good for a country at all, the Euro is a stronger steadier currency and it is excepted, and therefore recognised, worldwide.

A friend here imports big machinery from Japan, the Yen went up in value and the Zloty went down, creating an even bigger gap for his business, the contracts are all signed months in advance, he suffered huge losses and it will be a while yet before he will recover.

Bottom line it is very difficult to do business with a country that's currency is unstable.

Also there is a physiological border that needs to be crossed more, from ''Poland and the E.U.'' to ''Poland in the E.U.''

That's why you hedge on big contracts involving different currencies. Any competent financial adviser with basic risk management skills can put this together.

Yeah, but you know yourself, nobody expects the unexpected or the Spanish inquisition ;)

I have "lost" money and "made" money as I usually work with a few different currencies and I think I have broken even over the years but to honest it is just a pain in the buttocks.

It would make me happy when Poland gets the Euro :) but I won't hold my breath for it.

According to polls, majority of Poles are against.

Perhaps that's why PO is plowing on to adopt it. They are not Obywatelska for nothing.

They voted to join the EU, adopting the Euro is a compulsory part of membership. Apparently they was part of the voting process.

Show soem reasonh, in 2004 hardly anybody was thinking about euro adoption. Sorry.

Well Poles could vote to leave the EU. I guess they should have considered the implications more.

Poland needs to leave E.U. and leave N.A.T.O. , Poland needs to establish central Europe coalition and economical freedom by uniting Ukraine, Belarus, Latvia, Lithuania, Slovakia, Czech, Hungary, Moldavia, Rumania.

the Euro doesn't work, it's better to have freedom to set interest rates according to Polish priorities

It does work in some ways that you simply don't see. It removes the risk for businesses of exchange rates.

Quite a lot of Polish businesses got burnt badly with the crash in the value of the PLN in recent times. I know one German investor who lost around 200k EUR in one year because of this.

It's an easy acid-test for me, if the PiS is against something, I'm for it. And vice-versa. Kacynski says wait? Then I say full speed ahead. It's easy as that.

And when some of the leading economists in Poland with no connection to PiS say wait, what do you do then?

It's pretty obvious to anyone with the faintest grasp of economics that Polish accession to the Euro will be considerably trickier than Slovakia, Cyprus, Malta, etc.

Normal governments simply ask their central bank to buy their bonds, and if inflation has to be controlled, the central bank sells those bonds. And when they have to borrow from abroad, they have the freedom to tell foreign creditors to stuff it when they can no longer pay. Iceland did it. Kingdom of Egypt did it. Argentina did it. They were blocked from borrowing from abroad for a few years, and then came back. NO CONSEQUENCES WHATSOEVER.

The good old cycle of borrow, print, devalue, and default works wonderfully, without having to raise crippling taxes on the population. Really, does the population work for the government, or does the government work for the population? That's why one must never join the euro zone, and one must spend freely without worries of tax revenues.

Oh dear. Your grasp of economics is amusing, because if you knew the first thing about Icelandic economics, you'd know that you're completely and totally wrong.

studiotendra.com/2012/12/29/what-is-actually-going-on-in-iceland

Iceland is in a terrible mess and with no real way out of it. The government requires businesses to deposit their foreign exchange into the bank and imposes harsh capital controls relating to the flow of money. The ISK exchange rate is around 40% less outside of Iceland than in Iceland, and the way that debt works in Iceland is effectively strangling the people. The consequences have been very, very severe and there's no sign of anything getting better soon. I mean, as a supposed right winger, you should be supporting the free market, yet you're holding up Iceland as a good example despite the severe restrictions on business.


Argentina is also in economic trouble. The mere existence of the blue dollar should tell you a thing or two. Again, the people are in trouble as it is very, very difficult to get USD or other currencies there and the peso is extremely unstable.


Works well for governments, but not for ordinary people. Again, if you knew the first thing about these countries, you'd know that loans are normally linked to stable foreign currencies and so defaulting doesn't change anything for the ordinary people.

I do not consider myself "right winger", while I agree with them on many points, I do not take other people's views as packages I need to adopt myself.

The bondholders want to get bailed out, simply because they can and threaten to pull out and not invest anymore. If bailed out at 100%, it represents the worst kind of capitalism today, because it only punishes the borrower, and not the creditor, who made money while things were good. Worse, many Greeks were innocent and did not benefit, and now they have to pay.

That's why Iceland did default. People pulled out and its currency depreciated like crazy, but eventually things stabilized and now the country is ok. The depreciated currency was in effect a loss for the bondholders.

Greece can't default however for two reasons: first it doesn't have a currency to depreciate (therefore all of the adjustements would take place with lower wages and a vicious debt cycle) and second European banks hold the bonds, and they have a lot of power.

The country is not "ok". In fact, as I keep pointing out, Iceland is still in severe trouble with debts. In fact, the whole Icelandic system is still in a complete mess, and worse still, their entire banking industry has been sold abroad for not very much money.


Not quite. Many Greeks quite happily did things without a receipt or quite happily got paid cash in hand. They're now getting punished for their own collective greed, nothing less.

Iceland is a happier and healthier place than ever.
One would think that the misery of people who lost their jobs, up to 40% of their incomes, and the ability to pay off their loaded debts would drive them into depression, self-destructive behaviour, and a lot of bad habits.

Except it is not the case: nber.org/papers/w18233

During the deep Icelandic recession, losing their jobs had caused Icelandic people to surge in happiness and self-fulfillment. The salient points:

1. Icelanders stopped eating garbage.
As McDonalds and other fast food joints shut doors and as many unemployed Icelandic people started rationing their money on good food, their physical health and mental alertness improved dramatically. No longer are their minds and bodies poisoned by food that they should not be eating.

2. Icelanders started sleeping longer.
No longer having to worry about getting to work on time or staying up late to finish their pending work, Icelanders could finally give their tired bodies the long relaxation they always needed. The boom days demanded so much work from Icelanders that they could barely keep up a normal sleeping schedule.

3. Icelanders stopped drinking.
Work-related stress was so strong during Iceland's boom days that the only way for them to manage the chaos of their life was a drink in the bar. Not anymore. Alcoholism declined sharply among Icelanders and the sobriety contributed to the fall in their misery. As it is, a low income prevented purchase of alcohol anyway. The same happened with smoking.

4. Icelanders got a lot more time for the opposite sex.
The lady behind this research, Tinna Aggersdottir, herself says that she could finally spend more time with the man with whom she was having an on and off romantic relationship for years now. Romance bloomed in Iceland as people finally had something other than their job to spend all their time and mental effort.

5. Icelanders no longer faced the grueling misery of the workplace.
While losing one's job can be a source of misery, it can also be that the job itself was much of the source of a man's misery in the first place. That was the case with many of the Icelanders surveyed, who answered that on the whole, they felt their life was much better than before, when they were working longer and harder.

Apart from all this, Icelanders got a lot more time to excercise and get back in shape, and in general do a lot more things that a working life prevented them from doing.

Oh dear. If you call happiness the current situation where they have severe debts to the now-foreign banks and no prospect of actually paying off these debts, then your grasp of economics is even shakier than I thought.

It is interesting that you seem to think that not having money and being unemployed is a source of happiness however. Personal experience?

Did you actually read the **** I quoted? This broad has the brain capacity of a gnat.

The recession in Iceland is already over and Iceland has recovered significantly before that could happen. ;) The study compares conditions during 2007 - the start of the recession- and 2009 - the deepest point. And by 2012, Iceland is far above the 2009 or 2007 levels.

From what i understand, Iceland is recovering because they had the balls to actually hang the bankers by the neck.
Even if their initial GDPs were halved, they would still be richer than the average European country. Iceland currently have a higher per capita income than Germany or France, for example.

+1


The key is Polish businesses. Euro is good for importers and foreign investors not for Polish economy.


Are you stupid or something?

Personal attacks are the only thing you are good at? Curious it was the first thing springing into your mind. I do know that st's quite hard on the lower classes and almost all normal people, to be sure. Nothing to scoff at. Bright enough people create jobs by simply standing around until somebody hires them. It happens to me all the time. No matter how screwed up the IT industry gets (and it's pretty bad sometimes) there will still be people so driven to desperation they will still hire people on merit instead of one million other criteria. Fact is, guys like me just seemingly make many problems go away magically. Of course they can always fire us afterwards once they get enough breathing room but when driven to sobriety by necessity, you will always see people like me get hired (as transient contractors).

As Dr. Laurence Peter said (author of the Peter Principle) once a corporation finds itself in desperate straits and on the verge of bankruptcy, they will often resort to radical approaches like hiring smart competent people. They only have to stay on long enough to get the job done and then they can be terminated.

Dr. Peter found that all meaningful and productive work within corporations is achieved entirely by workers he described as "transients." This was confirmed over the next thirty years by dozens of other studies involving thousands of corporations. When Dr. Peter was asked what was achieved by permanent staff, he suggested mainly forming petitions in the office to fire transients. Sorry but that's mankind.