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Nicolae Danila, the National Bank : The adoption of the euro before 2015 is neither viable nor feasible

According to specialists, Romania does not adopt the single currency quicker, due to the costs which are higher than the benefits.

At present, there are two scenarios which were discussed ; the early adoption or the delayed adoption, both with advantages and disadvantages. Nicolae Danila, the former chairman of the biggest Romanian bank, at present member in the BNR board, explains the advantages and the disadvantages of both scenarios.

According to Danila, the quick adoption of the euro is neither feasible nor viable. " The calendar of adoption proposed by BNR is the result of extreme variant elimination - respectively the early adoption of the single currency or the delay of the adoption" Danila says.

According to his opinion, the necessary scenario according to which Romania would adopt the single currency before the official calendar would mean a lot of advantages but disadvantages as well.

« The advantages would be the acceleration of cost reduction and the risk ofn the exchange rate. I think that we may assist at the improvement of the consistency of the macro policies mix, especially as regards the avoidance of policy of income and fiscal relaxation" Danila thinks. On the other hand, the disadvantages would mean the increase of risks of asimetric shocks due to the economic cycles different between Romania's economy and the other states in euroland. Moreover, Danila says, when you adopt the euro, you don't have your own monetary policy, which makes you be vulnerable to the risk of adjustment through production or unemployment.

The other scenario, that of adopting the euro after 2015, the biggest advantage would be the one that would allow the consistent advancement of nominal and real convergence. At the same time, Nicolae Danila thinks, the chances for the implementation of structural reforms would increase.

« There are the advantages of improving the syncronisation of the business cycle and that of keeping the flexibility deriving from the autonomy of the monetary policy. But, on the other hand, we have disadvantages which put under question the utility of the decision to postpone the adoption of the euro. The first disadvantages would be connected to the delay in the integration of commerce due the persistence of trading costs, the delay in structural reforms, the decrease of investors' interest and not last, the volatility of the exchange rate" Nicolae Danila says.

Sursa: http://www.actmedia.eu

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