Countries in Europe that use and doesn’t use Euro (Why?)

Countries in Europe that use and doesn’t use Euro, And Why?

According to the United Nations, Europe consists of 44 countries. 28 of them are members of the European Union, with Croatia joining in 2013.

Twenty European countries do not utilize the Euro as their official currency.

Some of these nations are not members of the EU, and some of those that are do not have “adoption of the Euro” on their agenda.

Here are a few of the more unusual examples from each division.

Denmark is a socialist country with a high standard of living supported by generous incomes and high taxes.

Norway goes hand-in-hand with Denmark in many ways but one: it is not part of the EU while Denmark is, although the latter is not planning on adopting the Euro. In fact, Denmark negotiated an “opt-out” in the membership of the Euro currency section of the EU policy.

How Are They Doing So Well?

Russia

Russia has one of the lowest valued currencies in Europe, at 1 ruble equivalent to 0.014 US cents.

It also features relatively cheap prices for foreign visitors and a low buying power when Russians travel abroad with rubles to convert. It is also a unique case because it will “never” join the EU.

Iceland

Iceland, a non-EU country, has the lowest valued currency out of the countries that are not in the EU and second-lowest out of the twenty European countries that do not use the Euro, with 1 Icelandic krona valued at $0.007 USD.

Nevertheless, Icelanders’ salaries reflect Iceland as a thriving country.

What Makes Iceland Great?

A mixed economy, meaning a high level of both free trade and government intervention, works together to keep the economy stable and the country prosperous.

In fact, Iceland’s economy is growing faster than the US and other European countries.

Some say that the Icelandic tough attitude has gotten its economy out of the 2008 slump.

Although unemployment there is less than 5%, the people often work 60-70 hours a week, giving Iceland its label of being a tenacious nation.

Ukraine 

Ukraine has long been planning on joining the EU. In fact, if a referendum took place in the near future, polls indicate it would be supported by 57% of the nation.

However, this only helps Ukraine meet one of the requirements for joining the EU, in that the country must have “the consent of their citizens – as expressed through approval in their national parliament or by referendum.”

What stands most in the way is its weak economy. To join the EU, a country must demonstrate:

• Stable institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities;
• A functioning market economy and the capacity to cope with competition and market forces in the EU;
• The ability to take on and implement effectively the obligations of membership, including adherence to the aims of political, economic and monetary union.

Not only does the Ukrainian economy still lack the capacity to cope with competition and market forces in the EU, its willingness to adhere to the aims of political, economic and monetary union would also come under question.

Lastly, its treatment of the Roma population within the country has been less than exemplary, especially after the 2018 attacks against Roma peoples that occurred around Kyiv and in Lviv.

Romania

Romania joined the European Union in 2007, stating that it was planning to adopt the Euro by 2019. Because of the worldwide economic slump of 2008, the plan was pushed back further to 2022, and currently, the projected date of joining is in 2024, but many say this target is ambitious.

Romania has significant economic challenges to make up as it is struggling to meet EU targets, and COVID-19 is not making it any easier.

Hungary 

Hungary, an emerging country and part of the EU, is not planning on switching to Euro, even though it has the lowest valued currency out of all European countries.

Its forint is worth $0.003 USD, so its low-valued currency does not give the Hungarians much buying power when travelling abroad.

Hungary’s government seems to want to study the effects of Euro adoption thoroughly before deciding to make the switch, with officials having been quoted saying it could be decades away.

Mandatory Implementation

Effects On The Economy

Currently, countries with their own currencies have a national banking system that can modify the value of the currency and the amount of notes created based on the needs of the country for a variety of reasons, including inflation control.

The country accepts to be administered by the European Central Bank whenever it joins the European Union.

If the economy is already fragile, switching to the Euro might be a difficult process. Due to economic circumstances, especially the stresses introduced by the COVID-19 epidemic, several of the nations on this list are members of the EU but have yet to adopt the Euro.

Another economic complication that comes with transitioning from a home currency to the Euro is the banking system adjustment.

When a country is transitioning or transferring too soon, inflation becomes a risk and the most common problem.

To begin, the EU wants a stable economic climate, in part to prepare the country for eventual Euro adoption.

The EU claims that adopting the Euro will provide several benefits to member countries, including simplified commerce, a more stable economy, and more options and possibilities for consumers.

However, stabilizing an economy through a shared currency can be a long-term process, particularly if the country starts with a weak economy.

The EU further states that hurdles to adopting the Euro that can derail a country’s adoption include a lack of political commitment, differing views on economic objectives within the country, and market instability.