To Euro or not to Euro…that is the question the 2019 Cohort asked Martin Vojta of the Czech National Bank. Czechia is a part of the European Union and does have an obligation to eventually adopt the Euro as a part of their membership treaty (only the UK and Denmark have "opt out" clauses in the treaties that entered them into the European Union), however, they are very reluctant.

The reason is two-fold. First, the people of Czechia have invested part of their identity into the Koruna (Crown), the current currency. Historically, this country has always used the Koruna as their currency, going back to the 19th century (Austrian-Hungarian Koruna, Czechoslovak Koruna, Protektorate Koruna under the Nazis, and even as a Soviet satelite). The Koruna is their own. It is managed by their bank, not some outside entity who doesn't have Czechia's best interest at heart. And, it is managed well.

That brings us to the second reason: management of the currency. Based upon the state of a country's economy, each entity constantly elevates or devalues their currency in order to keep the economy afloat. And, this would be fine with the Euro if every member of the EU ceased to operate as separate countries with their own economies. If they all merged into one entity, then what happens in Prague would affect the bottom line in Paris and the Euro would be adjusted accordingly.

But, that is not how the Euro is managed. The Euro is managed by the European Central Bank which has a responsibility to balance the needs of all members nations, which makes it not very likely to inflate or devalue the Euro to meet one nation's needs. In this balancing, the ECB tends to favor the two biggest nations in the EU: France and Germany. The smaller nations seem to never get any consideration. There are many who say that one of the downfalls in Greece today was adopting the Euro. And, it is this very perception that keeps Czechia from transitioning to the Euro. They have chosen to follow the path of Sweden by intestinally avoiding the fulfillment of the adoption requirements.

Not a permanent avoidance; a wait and see avoidance. If and when Czechia sees the adoption of the Euro as the better option, they will revisit the idea.