The euro has been a “strategic error” the Governor of the Bank of Hungary (NBH), Gyorgy Matolcsy, wrote in an article published by the Financial Times.
Under Prime Minister Viktor Orban, Hungary has pursued its own mix of economic policy, promoting export-led growth, steering away from adopting the euro to retain competitiveness, and now boasts 3,4% unemployment and the 14th least unequal economy in the world.
“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 eurozone finance minister and a ministry to go with the post — are still missing,” Matolcsy said.
The Hungarian Central Banker echoes the reform agenda advocated by one of Hungary’s fiercest critics, President Emmanuel Macron of France, who presented a reform agenda for the eurozone that was rejected by Germany and the Netherlands.
Matolcsy also echoes Italy in calling for the review of the 3% deficit rule, despite the fact that Hungary maintains its deficit well below that threshold.
Recalling that the Euro was a political compromise, through which France sought to contain resurgent German power, Matolczy argues that the single currency has been a mistake. On the one hand, it has provided the German economic engine with a weak currency turning it into a “global export machine,” allowing Berlin to become complacent and underinvest in physical and digital infrastructure, or indeed research. On the other hand, most eurozone countries fared better before the euro. In addition, the euro is also widening the gulf between Euro-Atlantic partners.
“… Time has come to wake up from this harmful and fruitless dream,” Matolczy argues, calling the euro “a trap” from which eurozone members should be allowed to leave.