?TK |
9 May 2013
Prague, May 7 (CTK) - Even when the Czech National Bank (CNB) backs the setup of the banking union in the euro zone, the Czech Republic's membership in the union would not be advantageous now, CNB governor Miroslav Singer said at the Zofin Forum Tuesday.
By entering the banking union, the Czech Republic would lose national supervision over the financial sector, would be unable to vote in the European Central Bank's (ECB) key body which has the powers to decide and would not even have the right for potential help, he added.
"The opinion of the Czech government and the Czech National Bank is completely identical. I would say that there is almost an idyllic agreement," said Deputy Finance Minister Radek Urban.
At this moment, the balance of the emerging union is strongly at the Czech Republic's disadvantage, he added.
"The proposal says give up your national powers of supervision now and you will be able to draw money from the ESM [European Stability Mechanism] fund some time in the future," Urban noted.
Singer pointed at the fact that the banking union's purpose is keeping the euro zone's existence.
"The union's most important elements are just being created and its resulting form is not yet known," Singer added.
The single supervision over the financial market, which should start functioning as of March 2014, will concern the euro zone. The other EU countries can join it voluntarily.
The CNB backs the banking union's setup and will continue trying to help its setup. On the other hand, the central bank will try to reduce the risks that domestic banks be drawn into the euro zone's crisis, Singer said.
"The Czech crown does not need the banking union for its existence," he remarked.
Singer does not think that the Czech Republic would adopt the euro before 2017. It is technically possible but the election cycle in the Czech Republic does not indicate it.
President Milos Zeman said in an interview for German regional newspaper Passauer Neue Presse in the middle of April that the Czech Republic could become the euro zone's member within five years.
"The decision depends on political debate and I at the moment see no reason to hurry to the euro zone. But it is primarily a political problem," Singer said.
General elections will be held in the Czech Republic next year. The Czech Republic should submit the application for euro zone entry by spring 2015 if it wanted to use the euro as of January 1, 2018, according to Singer.
Moreover, the government usually makes important budgetary decisions in the third and fourth year in power so Singer is rather sceptical as regards the euro's adoption any time soon.
The Czech Republic is not meeting all the conditions for euro adoption at the moment, but it is better at complying with the criteria than many euro zone countries.
European Council President Herman Van Rompuy said earlier the debate on the Czech Republic's entry in the euro zone is the country's sovereign decision, which is not, however, on the agenda Tuesday.
The conditions for joining the euro include a public finance deficit below 3 percent of gross domestic product (GDP), public debt below 60 percent of GDP and price stability, for example.
The other criteria are stability of long-term interest rates and the stability of the national currency's exchange rate. The Czech Republic has not had problems with most of these conditions in the long term.
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