BUDAPEST: European Union member states, both in and outside the euro zone, should admit that the euro has been a “strategic error”, the Governor of the National Bank of Hungary (NBH) said in an opinion piece published in the Financial Times.
Hungary, which has followed a go-it-alone mix of economic policies since Prime Minister Viktor Orban rose to power in 2010, is not member of the euro zone and does not have a target date for euro adoption.
The government and the central bank have said Hungary should not join the euro before its economy is sufficiently strong.
Now NBH Governor Gyorgy Matolcsy said time has come for Europe to “seek a way out of the euro trap”.
“There is a harmful dogma that the euro was the ‘normal’ next step towards unifying Western Europe. But the common European currency was not normal at all, because almost none of the preconditions were met,” he said in the opinion piece published on Sunday.
“Two decades after the euro’s launch, most of the necessary pillars of a successful global currency — a common state, a budget covering at least 15-20 percent of the euro zone’s total gross domestic product, a euro zone finance minister and a ministry to go with the post — are still missing,” he added.
Matolcsy, who was appointed for a second six-year term as head of the central bank earlier this year, said members should be allowed to leave the euro zone in the coming decades and those remaining should build a “more sustainable global currency”.
He also said the 1992 Maastricht treaty, which sets out the conditions for joining the euro, one of which is keeping the budget deficit below 3% of economic output, should be rewritten.